When Cost Per Unit of Production for Two Goods Declines

question 71

Multiple Choice

When cost per unit of production for two goods declines as more are produced, a country that trades can

• A)rationalize production of both in order to enjoy the benefits of trade.
• B)expand production of both products.
• C)reduce the size of the market for the product it produces.
• D)contract production of both products.
• E)expand production of one product and contract production of the other.

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Definitions:

Expanded Sharply

Refers to rapid and significant growth or increase in a particular area, such as business, economy, or a specific sector.

Non-Cash Benefits

Forms of compensation provided to employees or beneficiaries that are not paid out in cash, such as health insurance, pension contributions, and food assistance.

In-Kind Benefits

Non-cash goods or services provided to beneficiaries, such as food stamps, housing, and healthcare, aimed to aid those in economic need.

Poverty Rate

The ratio of the number of people whose income falls below the poverty line; usually taken as a percentage of the population in a given country or region.