1. There are two countries (Country X and Country Y) and two goods(T-shirts and calculators). Country X imports T-shirts and exports calculators and Country Y exports T-shirts and imports calculators. The diagram on the right depicts the international market forT-shirts. A calculator costs $90.

   1. Under free trade, what is Country X?s terms of trade? (Give numerical answer.)

   2. If Country X imposes a $6 tariff on T- shirts, what are its nonterms of trade? (Give a numerical answer. Assume the price of calculators remains unchanged.) Have Country X?s terms of trade improved or deteriorated?

 

P ($) 24 22 20 18 16 14 12 10 8 6 4 2 5 O 0 2 6 10 14 18 22 4 8 12 16 20 24 (Th.)