Use the Following to Answer Questions

question 42

Multiple Choice

Use the following to answer questions:
Figure: PPF Mexico & United States
-(Figure: PPF Mexico & United States) Use the figure in which both Mexico and the United States each have 24 units of labor. The opportunity costs of producing one computer are:

• A) six shirts for Mexico and one shirt for the United States.
• B) 1/6 of a shirt for both Mexico and the United States.
• C) one shirt for Mexico and 1/6 of a shirt for the United States.
• D) six shirts for both Mexico and the United States.

---

Definitions:

Prices

The amount of money required to purchase a good or service, determined by factors like supply, demand, and market competition.

Marginal Rate

The rate at which a quantity increases or decreases as a result of a unit change in another variable, often used in the context of taxation or utility.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to replace more expensive items with cheaper alternatives.

Income Effect

The change in an individual's consumption patterns due to a change in their real income, typically following a price change of goods.