Question

After speaking to several pharmaceutical companies you conclude that any such new technology is impossible. But the European Union's trade representative has just informed you that she has managed to negotiate a trade deal with the United States. Under the arrangement, Europe will specialize in (and export) personal protective equipment while importing medicine from the United States. She has negotiated a trade price of 1/5 ton of personal protective equipment for 1 ton medicine. Assuming the European Union retains 1000 tons of personal protective equipment and exports the rest to the United States, how much medicine would the European Union have under the trade agreement?

Answer 1

In order to determine the amount of medicine the European Union would receive from the trade agreement with the U.S., the total initial amount of PPE available to Europe needs to be known. With that data, the formula Medicine received (in tons) = 5 * (total PPE - 1000) can be used to calculate the trade outcome.

Step-by-step explanation:

The student is asking about a trade deal between the European Union and the United States, where Europe will specialize in exporting personal protective equipment (PPE) and import medicine from the United States. The trade rate is fixed at 1/5 ton of PPE for 1 ton of medicine. If Europe retains 1000 tons of PPE for its own use and exports the rest, then we need to calculate the amount of medicine Europe would receive in this trade agreement.

Let's denote the total amount of PPE Europe has before retaining the 1000 tons as 'x'. According to the trade deal, Europe will export (x - 1000) tons of PPE. For each 1/5 ton of PPE exported, Europe gets 1 ton of medicine. Thus, the formula to calculate the medicine Europe would receive is: Medicine received (in tons) = (x - 1000) / (1/5). This simplifies to: Medicine received (in tons) = 5 * (x - 1000). To determine the exact amount of medicine Europe will receive, we would need to know the total amount of PPE (x) that Europe has initially. Once we have that figure, we can plug it into the formula to get the result.