Refer to the Above Diagrams

question 38

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:

Marginal Cost

The leap in all-encompassing expenses associated with the production of an additional unit of a product or service.

Average Total Cost

The cost of producing everything, when divided by the number of units made, signifies the cost for each unit produced.

Average Variable Costs

The total variable costs of production divided by the quantity of output produced, representing the variable costs per unit of output.

Mud Statues

Sculptures made from mud or clay, often created as part of artistic or cultural traditions.