Production Possibilities Data for Two Countries, Alpha and Beta, Which

question 125

Multiple Choice

Production possibilities data for two countries, Alpha and Beta, which have populations of equal size. Refer to the above data.Assume the production possibilities in Beta double at alternatives A through E while remaining as shown in the table for Alpha.As a result Beta should:

• A)continue to specialize in producing chips.
• B)continue to specialize in fishing.
• C)no longer specialize and trade.
• D)specialize both in fishing and in producing chips and sell the surplus to Alpha.

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Definitions:

Individual Transferable Quotas (ITQs)

Limits (quotas) set by a government or a fisheries commission on the total number or total weight of a species that an individual fisher can harvest during some particular time period; fishers can sell (transfer) the right to use all or part of their respective individual quotas to other fishers.

TAC

Total Average Cost, the sum of all production costs divided by the number of goods produced, indicating the average cost per unit of product.

Arms Race

A competition between two or more parties to have the best armed forces and military technology, often leading to increased military spending and stockpiling of weapons.

Property Rights

Legal rights to possess, use, and dispose of assets including real property (land and buildings) and intellectual property.