Use the Production Possibilities Data Below for Honduras and Nicaragua

question 163

Multiple Choice

Use the production possibilities data below for Honduras and Nicaragua to answer the following question(s) .
Table 2-2

-Refer to Table 2-2. According to the law of comparative advantage, both Honduras and Nicaragua could gain if

• A) Honduras produced all of the apples and oranges and Nicaragua did not produce anything.
• B) Honduras specialized in producing apples, Nicaragua specialized in producing oranges, and they traded.
• C) Honduras specialized in producing oranges, Nicaragua specialized in producing apples, and they traded.
• D) Nicaragua and Honduras were both were self-sufficient and did not trade.

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Definitions:

Personal Tax Rate

The percentage of an individual's income that is paid to the government as tax.

Medium of Exchange

A medium of exchange is an intermediary instrument or system used to facilitate the sale, purchase, or trade of goods between parties.

Non-Interest-Bearing Asset

An asset that does not generate interest income for its holder.

Measure of Wealth

A metric or approach to evaluate the value of assets owned by individuals, businesses, or countries.