Suppose There Are Only Two Goods in the World, Corn

question 139

Multiple Choice

Suppose there are only two goods in the world, corn and shirts. If it is true that with its vast resources the United States could produce both more corn and more shirts than Mexico,

• A) Mexico will never have a comparative advantage and, thus, can never gain from trading with the United States.
• B) trade between the United States and Mexico will make the United States better off but will leave Mexico worse off unless the wage of workers in Mexico rises to equal that of American workers.
• C) total production of corn and shirts cannot be increased through specialization and trade.
• D) both countries will be able to gain from specialization and trade as long as relative costs of producing the two goods are different in Mexico than in the United States.

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Definitions:

Classical Conditioning

A learning process in which two stimuli are continuously coupled; the response, initially precipitated by the second stimulus, is ultimately precipitated by the first stimulus by itself.

UCS

An acronym for "Unconditioned Stimulus," a stimulus that naturally and automatically triggers a response without prior learning.

CS

Common shorthand for "conditioned stimulus," a term from classical conditioning in psychology that refers to a previously neutral stimulus that, after association with an unconditioned stimulus, comes to trigger a conditioned response.

UCR

Unconditioned Response, an automatic response to a stimulus that does not need to be learned.