Suppose country Alpha must give up 2 units of clothing for each unit of food produced, while country Omega must give up 1/2 of a unit of clothing for each unit of food produced. If specialization and trade were to occur between these two fictitious countries, which of the following would be consistent with comparative advantage and mutually advantageous trade?
a. Omega will sell food to Alpha at a price of 1 unit of clothing for 1/2 unit of food.
b. Omega will sell food to Alpha at a price of 1 unit of clothing for each unit of food.
c. Alpha will sell food to Omega at a price of 2 units of clothing for each unit of food.
d. Alpha will sell food to Omega at a price of 1 unit of clothing for each unit of food.
b
You might also like to view...
"Granger laws" were early efforts by states to regulate the railroads and were
a. were severely limited in scope through litigation, b. generally outlawed both place and person discrimination, c. established commissions with the power to investigate complaints d. All of the above
An ethanol processing plant operates relatively efficiently when operating at its designed "capacity". The firm is willing to pay more for delivery of corn to maintain this level of output. This indicates that the firm is likely to experience ______ (higher, lower, the same) average total costs operating at less than this level of output.
a. Higher b. Lower c. The same
The operational components required for truly independent central banks include:
A. the chairperson of the bank being answerable only to the President. B. the ability to have policies reversed. C. monetary policies that cannot be reversed by anyone outside of the central bank. D. a budget controlled by Congress.
In a monopsonistic market
A) employment is lower but wages are higher than in a comparable competitive market. B) employment is higher but wages are lower than in a comparable competitive market. C) both employment and wages are higher than in a comparable competitive market. D) both employment and wages are lower than in a comparable competitive market.