Suppose There Are Only 2 Nations a and B,and Only

question 142

Multiple Choice

Suppose there are only 2 nations A and B,and only two goods,x and y.If nation A produces only x,it can make 20x per day.If nation A produces only y,it can make 15y per day.If nation B produces only x,it can make 15x per day.If nation B produces only y,it can make 15y per day.After trade begins nation ________ will specialize in the production of x and nation ________ will specialize in the production of y.

• A)A;A
• B)A;B
• C)B;B
• D)B;A

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Definitions:

Risk Reduction

Strategies or actions taken to decrease or mitigate the level of risk.

Expected Value

A statistical measure that calculates the average outcome of a random variable or process, factoring in all possible values and their probabilities.

Efficient Allocation

The distribution of resources in such a manner that it's impossible to improve anyone's condition without worsening someone else's.

Risk Diversified

The strategy of spreading investments across various assets to reduce exposure to risk in any single area.