elat Final Exam-International Trade Policy Dec 18, 10:30 am-12:30 pm your answer

Question

elat Final Exam-International Trade Policy Dec 18, 10:30 am-12:30 pm your answers from 01-010 in the following hos, 10 Reference Formula: wage = P^* MPLA = Ps* MPLB · · · world's demand = world's supply Home's demand + Foreign's demand = Home's supply + Foreign's supply Home's demand-Home's supply Foreign's supply-Foreign's demand Home's Import Demand = Foreign's Export Supply 1. According to the following figure (ABCDE are the notations for the black points), which of the following statement is true? QF PPF PPF Qc A. A is Home's Autarky equilibrium B. D is Foreign's Autarky equilibrium C. E indicates that Foreign will completely specialize when it's open to trade D. 13 shows the Autarky utility level

Explanation / Answer

The correct answer is: B)

Reason: option A) is incorrect as B is home's autarky Equilibrium.

Option C) is incorrect as E is not a point of complete specialisation for either country.

Option D) is incorrect as I2 is autarky Equilibrium level.

Hence, B) is the only correct option.

Thanks!

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