Refer to the Above Diagrams

question 36

Multiple Choice

Refer to the above diagrams.The solid lines are production possibilities curves; the dashed lines are trading possibilities curves.The data suggest that:

• A)West Lothian should specialize in, and export, beer.
• B)both countries will be better off if they do not engage in specialization and trade involving these two products.
• C)West Lothian should specialize in, and export, pizza.
• D)East Lothian should specialize in, and export, beer.

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Definitions:

Investment

The allocation of resources, usually financial, into projects, assets, or enterprises, aiming to earn a return over time.

Inventory

The total amount of goods and materials held in stock by a business, industry, or other entity, used in production or sales.

Sole Proprietorship

An unincorporated business firm owned by one person.

Liability

Liability refers to legal financial debts or obligations that arise during the course of business operations, which an entity is responsible for settling.