The Slope of the Linear Production Possibilities Curve Before Trade

question 19

Multiple Choice

The slope of the linear production possibilities curve before trade is determined by the

• A)available quantity of labor in the country divided by the average labor productivity.
• B)average labor productivity divided by the average wage.
• C)average labor productivity.
• D)opportunity cost of production.
• E)available quantity of labor in the country.

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Definitions:

Game Theory

A branch of mathematics and economics that studies the strategic interactions among rational decision-makers, aiming to predict their choices of action given the rules of the game and the actions of others.

Oligopoly

A market structure dominated by a small number of large firms, leading to limited competition and potentially collaborative behavior that influences prices and production.

Nash Equilibrium

A concept in game theory where no player can benefit by changing strategies while the other players keep theirs unchanged, indicating an optimal strategy set for all players.

Positive-Sum Game

In game theory, a game in which the gains (+) and losses (−) add up to more than zero; one party’s gains exceed the other party’s losses. A strategic interaction (game) between two or more parties (players) in which the winners’ gains exceed the losers’ losses so that the gains and losses sum to something positive.