The question requires us to determine the higher
Explanation of Solution
A country sets the price of importing goods either less than or equal to the
The following graph represents the production of wheat and textile in country A and country B:
Country | Wheat (bushels) | Textile |
Country A | 200 | 100 |
Country B | 100 | 150 |
From the given table:
The opportunity cost of producing a bushel of wheat in country A
The opportunity cost of producing a bushel of wheat in country B
The opportunity cost of producing a bushel of wheat in country B is 1½ units of textile.
So, the highest price country B will pay to purchase wheat from country A is 1½ units of textiles. Option “d” is correct.
Chapter 4 Solutions
Krugman's Economics For The Ap® Course
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