A Level Economics (9708)•9708/13/O/N/24

Explanation
Trade gains from full specialization in cars Steps:
- Specialize in cars to reach maximum production on PPC: 1000 cars.
- Export all 1000 cars at terms of trade: 4 cars per 1 truck.
- Import trucks: 1000 cars ÷ 4 = 250 trucks.
- Domestic market gains 250 extra trucks compared to autarky at point X.
Why A is correct:
- Matches exact import calculation from full car export using given 4:1 terms of trade.
Why the others are wrong:
- B: Assumes 6000 cars produced/exported, exceeding PPC maximum.
- C: Assumes 1:1 trade ratio or 4000 cars, ignoring 4:1 terms.
- D: Assumes 2:1 ratio or 8000 cars, inconsistent with terms and PPC.
Final answer: A
Topic: Production possibility curves
Practice more A Level Economics (9708) questions on mMCQ.me