In 1950,residents in Liberia Were Wealthier Than Those in Taiwan

question 41

Multiple Choice

In 1950,residents in Liberia were wealthier than those in Taiwan.Today,per capita gross domestic product (GDP) in Taiwan is more than 20 times that of Liberia.Which of the following best explains why Taiwan is now so much wealthier than Liberia?

• A) Taiwan is a very large country with lots of resources,while Liberia is very small.
• B) Liberia lacks the sort of institutions that promote growth that Taiwan has.
• C) Taxes in Liberia are very high and prevent the economy from growing.
• D) All production in Taiwan is managed by the government,while in Liberia,the free market allocates resources.
• E) Liberia does not trade with other countries,while Taiwan has many trading partners.

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Definitions:

Opportunity Cost

The consequence of forfeiting potential gains in other options by deciding on one.

Professional Team

A group of individuals with specialized skills and expertise working together in a coordinated manner towards common professional goals.

Opportunity Cost

The cost of missing out on potential benefits from other alternatives when making a choice.

Forgone Current Income

The income an individual or entity could have earned but chose to forego for pursuing an alternative.