If the World Price of Coffee Is Higher Than Colombia's

question 40

Multiple Choice

If the world price of coffee is higher than Colombia's domestic price of coffee without trade,then Colombia

• A)should import coffee.
• B)has a comparative advantage in coffee and should export coffee.
• C)should produce just enough coffee to satisfy domestic demand.
• D)should produce no coffee domestically.

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Definitions:

Marginal Cost

The financial increase associated with the generation of one more unit of a product or service.

Average Variable Cost

The variable cost per unit of output, calculated by dividing the total variable costs by the quantity of output produced.

Market Price

The prevailing cost at which a service or product can be acquired or disposed of in a marketplace.

Marginal Cost

The cost of producing one more unit of a good or service, which can vary depending on the level of production.