Using the figure above, suppose with no trade Liz and Joe each produce at point A on their respective PPFs. Then, Joe suggests that they specialize and trade. He would produces only salads and Liz would produce only smoothies
Then, Joe says, he would buy 16 smoothies from Liz at a price of 1.5 salads per smoothie. Liz should A) accept Joe's offer since she will gain 4 smoothies and 4 salads.
B) accept Joe's offer as she will be as well off as with no trade.
C) not accept Joe's offer as the price he offers is too low for her to gain from trade.
D) not accept Joe's offer since she would lose 2 smoothies and 2 salads.
E) accept Joe's offer since she will gain 4 salads.
A
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The phrase "smart for one, but dumb for all" refers to the idea that the individual pursuit of self-interest:
A. never leads to an efficient outcome. B. doesn't always lead to an efficient outcome. C. always leads to an efficient outcome. D. only leads to an efficient outcome when everyone is well-informed.
The long-run Phillips curve is ________ than the short-run Phillips curve.
A) less stable B) more volatile C) steeper D) flatter
Over the past few decades, nominal interest rates have been higher than real rates of interest. This means that
A. lenders must have expected inflation. B. borrowers must have expected deflation. C. lenders must have expected prices to fall. D. borrowers must have expected prices to fall.
Presenting options in a fashion that makes people more likely to make one choice over another is called:
A. choice architecture. B. the ACE model. C. traditional economics D. natural experiments.