In Lurnee, It Takes 10 Resources to Produce 1 Ton

question 115

Multiple Choice

In Lurnee, it takes 10 resources to produce 1 ton of cocoa and 13.5 resources to produce 1 ton of rice. In South Tyberg, it takes 40 resources to produce 1 ton of cocoa and 20 resources to produce 1 ton of rice. Lurnee has a comparative advantage over South Tyberg in cocoa. This follows the theory of comparative advantage, and we can say that engaging in free trade benefits all countries that participate in it; however, this conclusion stems from which of these inaccurate assumptions?

• A) We have assumed constant returns to scale.
• B) We have assumed the prices of resources and exchange rates in the two countries are dynamic.
• C) We have assumed there are barriers to the movement of resources from the production of one good to another within the same country.
• D) We have assumed that agrarian nations do not specialize in producing particular products.
• E) We have assumed diminishing returns to specialization.

---

Definitions:

Support Programs

Initiatives or services designed to provide assistance and resources to individuals facing challenges or needing help in specific areas of their lives.

Mental Health Complaint

Any grievance or issue related to one's mental health, ranging from diagnoses and treatment dissatisfaction to concerns about care accessibility.

Pick's Disease

A rare type of progressive dementia that affects the brain's frontal and temporal lobes, leading to changes in personality, behavior, and language.

Creutzfeldt-Jakob Disease

A rare, degenerative, invariably fatal brain disorder affecting about one in every one million people per year.