When People Specialize in the Activity in Which They Have

question 40

Multiple Choice

When people specialize in the activity in which they have a comparative advantage,

• A)there cannot be a division of labor, though production will increase.
• B)there will likely be a division of labor as well as an increase in output.
• C)there will be a gain from trade, but production will not be increased.
• D)there will likely be a division of labor, and output will stay the same.
• E)there will likely be a division of labor, and output will decline.

---

Definitions:

Identical Product

A product that is exactly the same in every feature, quality, and production process with another product, making them interchangeable.

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 state of balance.

Jointly Maximize Profits

A strategy where multiple parties or firms collaborate to enhance their collective profitability.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping to the right.