The Gains from Free Trade Are Enjoyed by a ________

question 111

Multiple Choice

The gains from free trade are enjoyed by a ________ number of people and the costs of free trade are imposed by ________ number of people.

• A) small; large
• B) large; small
• C) small; small
• D) large; large

---

Definitions:

Isoquants

Curves on a graph that represent combinations of factors of production that yield the same level of output.

Scale

The size or level of activity of a project, business, or operation, which can significantly affect its efficiency, costs, and profitability.

Decreasing Returns

A principle where an increase in the amount of one factor of production, while other factors are held constant, results in a lower ratio of output per input.

Diminishing Returns

A principle stating that if one factor of production is increased while others are held constant, the incremental output will eventually decrease.