Given: In the US consumption of apples was Free Trade, consumption of apples was 6000, bananas-1500, the prices were $0.05/apple, $0.07/banana. America specializes in apples. If the banana production in the US has been stopped as a result of the Free Trade, can it be that both banana-producers and banana- workers are worse-off? OA Yes, because lucrative business left for the other country OB No, because at least one group wins. OC No, because total income increased. OD Yes, but the situation may be adjusted because total income in the society has increased.

MACROECONOMICS
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ISBN:9781337794985
Author:Baumol
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Chapter18: International Trade And Comparative Advantage
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Given: In the US with No Trade, consumption of apples was 6000, bananas - 1000, the prices were $0.05/apple, $0.10/banana. With
Free Trade, consumption of apples was 6000, bananas - 1500, the prices were $0.05/apple, $0.07/banana. America specializes in
apples.
If the banana production in the US has been stopped as a result of the Free Trade, can it be that both banana-producers and banana-
workers are worse-off?
OA Yes, because lucrative business left for the other country
OB. No, because at least one group wins.
OC. No, because total income increased.
OD. Yes, but the situation may be adjusted because total income in the society has increased.
Transcribed Image Text:Given: In the US with No Trade, consumption of apples was 6000, bananas - 1000, the prices were $0.05/apple, $0.10/banana. With Free Trade, consumption of apples was 6000, bananas - 1500, the prices were $0.05/apple, $0.07/banana. America specializes in apples. If the banana production in the US has been stopped as a result of the Free Trade, can it be that both banana-producers and banana- workers are worse-off? OA Yes, because lucrative business left for the other country OB. No, because at least one group wins. OC. No, because total income increased. OD. Yes, but the situation may be adjusted because total income in the society has increased.
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