Given the Diagram Below, Which Shows Country a in Its

question 22

Multiple Choice

Given the diagram below, which shows country A in its autarky position at point E [where the price line labeled p₀ is tangent to both country A's production-possibilities frontier (PPF) and country A's indifference curve S₀]:

If country A now is opened to international trade in a situation where the price of bread relative to the price of meat is lower on the world market than it is in A's autarky position, then __________; with international trade, country A will be __________.

• A) country A will face a steeper price line than p₀ and will change production to a point On the PPF that is downward and to the right from point E; exporting meat and Importing bread
• B) country A will face a steeper price line than p₀ and will change production to a point On the PPF that is downward and to the right from point E; exporting bread and Importing meat
• C) country A will face a flatter price line than p₀ and will change production to a point on The PPF that is upward and to the left from point E; exporting meat and importing Bread
• D) country A will face a flatter price line than p₀ and will change production to a point on The PPF that is upward and to the left from point E; exporting bread and Importing meat

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Definitions:

Incurred Expense

An expense that has been recognized in the accounting period in which it is incurred, regardless of when the payment is made.

Total Liabilities

The sum of all financial debts or obligations a company owes, shown on the balance sheet.

Expense Account

An account where business-related expenses are recorded, often used for tracking purposes for budgeting or tax deductions.

Incurred

Expenses, losses, or liabilities that have been suffered or assumed in the course of conducting business.