Instructions [38 - 42 ] 

Three countries — Pumpland (P), Xiland (X) and Cheeseland (C) — trade among themselves and with the (other countries in) Rest of World (ROW). All trade volumes are given in IC (international currency). The following terminology is used:

• Trade balance = Exports - Imports

• Total trade = Exports + Imports

• Normalized trade balance = Trade balance / Total trade, expressed in percentage terms

The following information is known.

1. The normalized trade balances of P, X and C are 0%, 10%, and -20%, respectively.

2. 40% of exports of X are to P. 22% of imports of P are from X.

3. 90% of exports of C are to P; 4% are to ROW.

4. 12% of exports of ROW are to X, 40% are to P.

5. The export volumes of P, in IC, to X and C are 600 and 1200, respectively. P is the only country that exports to C.

How much is exported from C to X, in IC?

The correct answer is 48.

To find the volume of trade exported from Cheeseland (C) to Xiland (X), we can break down the information step-by-step using the trade rules and the data provided in the question.

Step 1: Determine the total imports of Cheeseland (C)
According to Statement 5, Pumpland (P) is the only country that exports to C. This means all of C's imports come exclusively from P:
Imports of C (I_C) = Exports of P to C (T_PC)
From Statement 5, we know that the export volume of P to C is 1200 IC. Thus:
I_C = 1200 IC

Step 2: Determine the total exports of Cheeseland (C)
From Statement 1, the normalized trade balance of C is -20%. Using the definition of normalized trade balance:
$$\text{Normalized Trade Balance of C}=\frac{E_C-I_C}{E_C+I_C}\times 100\%$$
Substituting the normalized trade balance (-20% or -0.2) and I_C = 1200 IC:
$$\frac{E_C-1200}{E_C+1200}=-0.2$$
Solving for E_C (total exports of C):
$$E_C-1200=-0.2(E_C+1200)$$
$$E_C-1200=-0.2E_C-240$$
$$1.2E_C=960$$
$$E_C=800\text{ IC}$$
The total exports of Cheeseland (E_C) are 800 IC.

Step 3: Calculate exports from Cheeseland to Xiland (T_CX)
From Statement 3, we know the destination breakdown of C's exports:
• 90% of C's exports are to Pumpland (P)
• 4% of C's exports are to Rest of World (ROW)
Since a country does not export to itself, the remaining exports of C must go to Xiland (X). Thus:
$$E_C=T_{\text{CP}}+T_{\text{CX}}+T_{\text{C,ROW}}$$
Substituting the percentage values:
$$E_C=0.90E_C+T_{\text{CX}}+0.04E_C$$
$$E_C=0.94E_C+T_{\text{CX}}$$
Therefore, the exports from C to X are:
$$T_{\text{CX}}=0.06E_C$$
Using E_C = 800 IC:
$$T_{\text{CX}}=0.06\times 800=48\text{ IC}$$
Thus, the volume exported from Cheeseland to Xiland is 48 IC.