In an Open Economy in Which Only Two Goods Are

question 24

Multiple Choice

In an open economy in which only two goods are produced and possibly traded,we would find that

• A) production occurs where the production possibility curve is tangent to a line with the slope equal to the ratio of the world relative prices.
• B) production occurs where an indifference curve is tangent to the production possibilities curve.
• C) consumption occurs where an indifference curve is tangent to the production possibilities curve.
• D) consumption occurs where the production possibilities curve is tangent to a line with a slope equal to the ratio of the world relative prices.

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Definitions:

Task System

A labor system predominantly used in the rice and indigo plantations of the American South, where enslaved people were assigned specific tasks to complete each day, after which they had some personal time.

Historical Significance

The importance assigned to a past event, character, or invention, reflecting its impact on history and its influence on future developments or attitudes.

Underground Railroad

A network of secret routes and safe houses used in the United States during the 19th century to help enslaved African Americans escape to free states and Canada.

Historical Significance

The importance or impact that a particular event, figure, or development has had in history, influencing the future or shaping societal norms.