Use the Table Below to Answer the Following Question

question 45

Multiple Choice

Use the table below to answer the following question. The table outlines the production possibilities for two hypothetical countries. Which of the following statements is true?

• A) Redland has a comparative advantage in producing oats.
• B) Redland enjoys a comparative advantage in producing both products and could not gain from exchange.
• C) Redland should specialize in producing mutton and should trade for oats.
• D) In this example, Blueland has nothing to gain through trade with Redland.

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Definitions:

Output Quantity

The amount of goods or services produced by a company or sector during a specific period.

Social Planner

An idealized figure in economic theory responsible for designing economic policies or interventions to achieve optimal allocation of resources and welfare in a society.

Social Cost

The total cost to society, including both private costs incurred by producers and external costs to other parties not involved in the transaction.

Private Value

The value of an asset or service as perceived by an individual or entity, not necessarily reflecting its market value.