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2.6 The international economy (A-level only)

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Question 2

Two countries, Novaria and Zephyria, allocate all of their resources to produce either Electric Vehicles (EEE) or Microchips (MMM) under constant opportunity costs. The maximum potential outputs of each good, when all resources are devoted to its production, are shown in the table below:

CountryElectric Vehicles (E)Microchips (M)Novaria4080Zephyria1560 \begin{array}{|c|c|c|} \hline \text{Country} & \text{Electric Vehicles (E)} & \text{Microchips (M)} \\ \hline \text{Novaria} & 40 & 80 \\ \hline \text{Zephyria} & 15 & 60 \\ \hline \end{array} CountryNovariaZephyria​Electric Vehicles (E)4015​Microchips (M)8060​​

According to the theory of comparative advantage, which of the following represents a mutually beneficial terms of trade for 1 unit of Electric Vehicles (EEE)?

A

1 unit of EEE for 1.51.51.5 units of MMM

B

1 unit of EEE for 3.03.03.0 units of MMM

C

1 unit of EEE for 4.54.54.5 units of MMM

D

1 unit of EEE for 0.330.330.33 units of MMM

Markscheme

2.6 The international economy (A-level only) Questions

  1. A Level
  2. /Economics
  3. /2.6 The international economy (A-level only)

310 exam-style questions on AQA A Level Economics 2.6 The international economy (A-level only), covering 2.6.1 Globalisation, 2.6.2 Trade, 2.6.3 The balance of payments, 2.6.4 Exchange rate systems, and 2.6.5 Economic growth and development. Each one has a worked solution and a mark scheme showing where the marks go.

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