If a Country's P_X/P_Y in Autarky Is Less Than the P_X/P_Y

question 13

Multiple Choice

If a country's P_X/P_Y in autarky is less than the P_X/P_Y on the world market, then this country has a comparative advantage in the __________ good, and, if the country now engages in international trade and moves along its production-possibilities frontier, its
Production of the X good will __________.

• A) Y; increase
• B) Y; decrease
• C) X; decrease
• D) X; increase

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Definitions:

Half-Year Convention

An accounting method used for depreciating assets by which all assets acquired during the year are considered to have been acquired at the midpoint of the fiscal year, affecting the depreciation calculation.

Capital Budgeting Process

The procedure businesses follow to evaluate potential major projects or investments, through stages from proposal generation to project approval.

Favorably Biased

A tendency to present information in a manner that is more positive or beneficial than is justified by the facts.

Annual Depreciation Expense

The portion of the cost of a fixed asset that is expensed each year of its useful life, representing wear and tear, decay, or decrease in value.