The Most Obvious Benefit of Specialization and Trade Is That

question 137

Multiple Choice

The most obvious benefit of specialization and trade is that they allow us to

• A)work more hours per week than we otherwise would be able to work.
• B)consume more goods than we otherwise would be able to consume.
• C)spend more money on goods that are beneficial to society, and less money on goods that are harmful to society.
• D)consume more goods by forcing people in other countries to consume fewer goods.

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Definitions:

Returns To Scale

The change in output resulting from a proportional change in all input factors; identifies if output increases at a faster, equal, or slower rate than inputs.

Marginal Rate Of Substitution

The pace at which a consumer opts to swap one item for another, ensuring their overall happiness remains unchanged.

Marginal Product

The additional output that an additional unit of input (such as labor or capital) will produce, holding all other inputs constant.

Returns To Scale

The change in output resulting from a proportional change in all input factors where all inputs are increased or decreased by the same factor.