Suppose there are only 2 nations, Atlantis and Pacifica, and only two goods, surfboards and kayaks. If Atlantis produces only surfboards, it can make 27 per day. If Atlantis produces only kayaks, it can make 18 per day. If Pacifica produces only surfboards, it can make 32 per day. If Pacifica produces only kayaks, it can make 24 per day. After trade begins, ________ will specialize in the production of surfboards and ________ will specialize in the production of kayaks.
A. Atlantis; Atlantis
B. Pacifica; Atlantis
C. Atlantis; Pacifica
D. No trade will occur.
Answer: C
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Suppose that when NBC produces 1 new drama series in a season it gives up the chance to produce 3 new reality shows. This means that
A) the opportunity cost of a new drama series is 1/3 of a new reality show. B) the opportunity cost of a 1 new reality show is 1/3 of a new drama series. C) NBC has a comparative advantage in producing new drama series. D) NBC has a comparative advantage in producing new reality shows.
Which of the following statements best describes the relationship between a stronger currency and exports?
a. A stronger euro discourages exports by a European firm because it makes the costs of production in the domestic currency higher relative to the sales revenues earned in another country. b. A stronger euro encourages exports by a European firm because it makes the costs of production in the domestic currency higher relative to the sales revenues earned in another country. c. A stronger euro discourages exports by a European firm because it makes the costs of production in the domestic currency lower relative to the sales revenues earned in another country. d. A stronger euro encourages exports by a European firm because it makes the costs of production in the domestic currency lower relative to the sales revenues earned in another country.
Economies of scale often arise because higher production levels allow specialization among workers
a. True b. False Indicate whether the statement is true or false
A typical economic good has which one of the following characteristics?
A. The desired quantity exceeds the quantity available at a zero price. B. It is never scarce. C. It uses no resources to produce. D. The quantity available exceeds the desired quantity at a zero price.