If One Person Has the Absolute Advantage in Producing Both

question 119

Multiple Choice

If one person has the absolute advantage in producing both of two goods, then that person

• A)must also have a comparative advantage in both goods
• B)cannot benefit from trade
• C)cannot have a comparative advantage in either good
• D)will have the comparative advantage in only one good
• E)should specialize in the production of both goods

Understand the concept of compensating variation and equivalent variation in response to price changes.

Comprehend the effects of governmental or external limitations on consumer behavior, such as fishing licenses and their economic valuation.

Recognize the relationship between income, price changes, and consumer's ability to afford preferred bundles.

Grasp the concept of producer's surplus and its relation to supply and demand.

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Definitions:

Mindset

A person's way of thinking and their opinions, which can affect their behavior and perspective on life.

Intrinsic Motivation

The drive to engage in an activity for its own sake, deriving pleasure and satisfaction from the activity itself rather than for some external reward.

Extrinsic Motivation

Motivation driven by external rewards such as money, fame, grades, or praise, as opposed to inherent satisfaction.

Fixed

In a context, it refers to something that is securely attached or set in position without any movement; unchangeable.