Suppose There Are Only 2 Nations a and B, and Only

question 122

Multiple Choice

Suppose there are only 2 nations A and B, and only two goods, x and y. If nation A produces only x, it can make 16x per day. If nation A produces only y, it can make 4y per day. If nation B produces only x, it can make 20x per day. If nation B produces only y, it can make 4y per day. After trade begins, nation _______ will specialize in the production of x and nation _______ will specialize in the production of y.

• A) A; B
• B) A; A
• C) B; A
• D) B; B

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Definitions:

Agency Problem

A conflict of interest inherent in any relationship where one party is expected to act in another's best interests, such as between shareholders and management.

Corporate Behavior

The actions, strategies, and practices of companies in pursuit of their business goals, affecting stakeholders internally and externally.

Ethics

A set of moral principles that govern the behavior of individuals or organizations and guide decision-making and conduct.

Stakeholders

Stakeholders are individuals, groups, or organizations that have an interest in the performance and actions of a company, which can include shareholders, employees, customers, and suppliers.