: Question 3 2 pts Scenario 4-1 In a given year, country A exported $12 million

Question

: Question 3 2 pts Scenario 4-1 In a given year, country A exported $12 million worth of goods to country B and $6 million worth cf goods to country C, country B exported $4 million worth of goods to country A and $7 million worth of goods to country C; and country C exported $5 million worth of goods to country A and $2 million worth of goods to country B. Actording to Scenario 4-1, country B is running a: O trade surplus with both countries A and C O trade surplus with country A and a trade deficit with country C. O balanced trade with country A and a trade deficit with country C O trade deficit with country A and a trade surplus with country C trade deficit with both countries A and C ts

Explanation / Answer

Question 3: The right answer is option 4: Trade deficit with country A and a trade surplus with country C.

Explanation:

Trade deficit takes place when the import is higher than export. Trade surplus takes place when import is less than exports.

Country B's import from Country A = $12 million and Country's B's export to country A = $4 million. So, country B has trade deficit with country A.

Country B's import from Country C = $2 million and Country's B's export to country C = $7 million. So, country B has trade surplus with country C.

So, option 4 is correct.

Question 12: Option 2: Demand is inelastic

Explanation: When the absolute value of price elasticity of demand is between 0 and 1, it is called inelastic demand as the % change in demand is less than % change in price. In this problem, the absolute value of price elasticity of demand is between 0 and 1. So, option 2 is correct.

When the absolute value of price elasticity of demand is equal to 1, it is called unit elastic demand as the % change is demand is equal the % change in price.

When the absolute value of price elasticity of demand is greater than 1, it is called elastic demand as the % change in demand is more than the % change in price.

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