Refer to the graph shown.
Given these production possibility curves, you would suggest that:
A. Both countries should produce an equal amount of each.
B. Country A should specialize in widgets and Country B in wadgets.
C. No trade should take place.
D. Country A should specialize in wadgets and Country B in widgets.
Answer: C
You might also like to view...
The labor supply shock hypothesis suggests that
A) the United States and Europe are following similar labor market policies. B) there is a one-way causation from labor productivity to real wage growth. C) slow real wage growth and slow productivity growth are simultaneously determined by the labor market system. D) B and C. E) none of the above.
The Monetarists advocate the monetary rule in order to stabilize the business cycle which states that the money supply should be increased by a constant rate year after year
a. True b. False Indicate whether the statement is true or false
The U.S. Department of Agriculture and Ernst Engel have confirmed, separately, that there is an inverse relationship between income changes and food consumption
Indicate whether the statement is true or false
______ creates inefficiency in a labor market by preventing firms from hiring employees whose marginal revenue product is above the market wage
a. Efficiency wage b. Labor union c. Labor shortage d. Discrimination