Question

Suppose that the countries of Brazil, Argentina, Ecuador, and Venezuela have interdependent economies. The following table shows the imports and exports between each of these countries. All prices are given in millions of equivalent US dollars.

Country of Origin
Exporting to
Amount ($ 2007-13-04-00-00_files/i0160000.jpg1,000,000)
Brazil
Argentina
4,691
Brazil
Ecuador
4,791
Brazil
Venezuela
1,526
Argentina
Brazil
1,881
Argentina
Ecuador
1,971
Argentina
Venezuela
2,153
Ecuador
Brazil
3,106
Ecuador
Argentina
3,672
Ecuador
Venezuela
2,018
Venezuela
Brazil
4,535
Venezuela
Argentina
1,577
Venezuela
Ecuador
1,871

If these four countries trade only within this group, what is the difference between the highest balance of trade and the lowest balance of trade?
a.
$6,221,000,000
b.
$5,003,000,000
c.
$3,772,000,000
d.
$2,123,000,000

Answer 1

Compute each country's trade balance = exports − imports.

Exports:
- Brazil = 4,691 + 4,791 + 1,526 = 11,008
- Argentina = 1,881 + 1,971 + 2,153 = 6,005
- Ecuador = 3,106 + 3,672 + 2,018 = 8,796
- Venezuela = 4,535 + 1,577 + 1,871 = 7,983

Imports:
- Brazil = 1,881 + 3,106 + 4,535 = 9,522
- Argentina = 4,691 + 3,672 + 1,577 = 9,940
- Ecuador = 4,791 + 1,971 + 1,871 = 8,633
- Venezuela = 1,526 + 2,153 + 2,018 = 5,697

Balances (exports − imports):
- Brazil = 11,008 − 9,522 = +1,486
- Argentina = 6,005 − 9,940 = −3,935
- Ecuador = 8,796 − 8,633 = +163
- Venezuela = 7,983 − 5,697 = +2,286

Highest = +2,286 (Venezuela), lowest = −3,935 (Argentina). Difference = 2,286 − (−3,935) = 6,221 million = $6,221,000,000.

Answer: (a)