If Two Countries Each Are Currently Producing Two Goods, and Each

question 204

Multiple Choice

If two countries each are currently producing two goods, and each begins to specialize in the good in which it has a comparative advantage, what will happen to total (world) output?

• A)It will increase.
• B)It will decrease.
• C)It will be unchanged in both countries.
• D)It will rise in one country and fall in the other, but the total is unchanged.
• E)Uncertain; economic theory has no answer to this question.

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Definitions:

Public Good

A good or service offered to every member of a society for free, provided by either governmental bodies or private entities or individuals, without seeking to make a profit.

Demand Curve

An illustrated chart that displays the connection between a product's price and the amount consumers are willing to buy at those price levels.

Individual Demand

The amount of a product or service that a single consumer is willing and able to purchase at various prices, holding all else constant.

Society Demand

This refers to the total demand for various goods and services by all members of a society or community, often influenced by factors like price, income levels, and societal norms.