12. SCENARIO: PRODUCTION IN NORWAY Suppose that Norway is a small country and cu

Question

12. SCENARIO: PRODUCTION IN NORWAY Suppose that Norway is a small country and currently produces 100,000 board feet of lumber at $600 per 1,000 board feet. Then it begins to trade at the world price of $500 per 1,000 board feet. As a result of trade, Norway production falls to 50,000 board feet and its consumption increases to 200,000 board feet. Reference: Ref 8-3 (Scenario: Production in Norway) How many board feet of lumber does Norway now import? A) 250,000 board feet B) 200,000 board feet C) 150,000 board feet D) 100,000 board feet

Explanation / Answer

Ans.

C) 150,000 board feet

Consumption of Board feet 200,000 units.

Produciton in Norway 50,000 units.

Difference will be imported.

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