f18-my Page 14 of 23 Part B [8 marks] Answer all 8 questions; each question is worth 1 mark. The following 8 questions (41-48) relate to the information given below. Try to do the questions in order since the answers for some questions depend on the answers to previous questions in the series. B. The production possibility boundaries for Alberta and Ontario, both producing wine (W) (measured in bottles) and oil (O) (measured in barrels) are given by: Alberta: 0 = 40 - 4W Ontario: 0 = 30 - W You may wish to use the diagrams and space below to sketch production possibilities boundaries for Alberta and Ontario, and keep track of your answers as you work through the series. Oil Oil Wine Wine 41) If the provinces do not trade with anyone and each consumes at the midpoint of its production possibilities boundary, consumption of Wine and Oil in Alberta and Ontario will be given by (WA, OA), (Wo. Oo) = A) (15,15), (5, 20) B) (15,15), (20, 5) C) (5, 20), (15, 15) D) (20, 5), (15,15) E) none of the above 42) The opportunity costs of Wine in terms of Oil in Alberta and in Ontario respectively are: A) (4, 1 ) B) (1, 4) C) (1, 1) D) (0.25, 1) E) (1, 0.25)f18-my Page 15 of 23 43) Alberta has a comparative advantage in and Ontario has a comparative advantage in A) (Oil, Oil) B) (Wine, Wine) C) (Oil, Wine) D) (Wine, Oil) E) none of the above. 44) If the two provinces trade with each other only, Alberta and Ontario should specialize, respectively, in and A) (Wine, Wine) B) (Oil, Wine) C) (Wine, Oil) D) (Oil, Oil) E) none of the above 45) Now suppose the two provinces can independently trade with the outside world, but do not trade with each other. The world price is 1 bottle of wine for 5 barrels of oil. Then Alberta and Ontario will specialize, respectively, in A) (Wine, Wine) B) (Oil, Wine) C) (Wine, Oil) D) (Oil, Oil) E) none of the above 46) Suppose now that the worldwide producers of Oil form a cartel and manage to change the relative price of Oil so that one bottle of Wine is worth one barrel of Oil. Relative to the situation in question 45), and assuming that each province always consumes at the midpoint of its consumption possibilities frontier, this change will make Alberta and Ontario A) worse off, worse off B) better off, better off C) better off, worse off D) worse off, better off E) better off, no better or worse off 47) Given the situation in question 46), Alberta will A) export 15 barrels of Oil B) import 15 barrels of Oil C) export 20 bottles of wine D) import 20 bottles of wine E) export 15 bottles of wine 48) The federal government imposes a Protect Ontario Wine program (POW) that bans all external trade in Wine and Oil. The relative prices of oil and wine in Canada change so that one bottle of wine is worth two barrels of oil. Relative to the situation in 46) this makes Alberta and Ontario A) better off, better off B) worse off, worse off C) no better or worse off, no better or worse off D) better off, worse off E) worse off, better off