Consider an economy with only two goods: bread and wine. In 1982, the typical family bought 4 loaves of bread at 50¢ per loaf and 2 bottles of wine for $9 per bottle. In Year X, bread cost 75¢ per loaf and wine cost $10 per bottle. The CPI for Year X (using a 1982 base year) is:

Which of the following is true?

a. When economies of scale are important in an industry, the domestic market of a small country may not be large enough to support cost-efficient firms. b. In small countries, firms in industries where economies of scale are important will tend to export little, if any, of their output. c. The size of the trade sector (exports plus imports) as a share of GDP will generally be larger in more populous countries than in smaller less-populated countries. d. Countries with higher trade barriers have higher growth rates.

When a government imposes a tariff on a product, the domestic price will equal the world price

a. True b. False Indicate whether the statement is true or false