-Refer to the Above Table

question 158

Multiple Choice

-Refer to the above table. Assuming constant opportunity costs

• A)neither country will be willing to engage in trade at any rate of exchange of product A for product B.
• B)both countries will be willing to engage in trade at a rate of exchange of 0.3 unit of product A for 1 unit of product B.
• C)both countries will be willing to engage in trade at a rate of exchange of 3 units of product A for 1 unit of product B.
• D)both countries will be willing to engage in trade at a rate of exchange of 1.5 unit of product A for 1 unit of product B.

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Definitions:

ATC

Average Total Cost; the per unit cost of production, calculated by dividing the total cost by the quantity produced.

Monopolistically Competitive

A market structure characterized by many firms selling products that are similar but not identical.

Profit-Maximizing

A strategy or approach used by businesses to determine the price and output level that generates the maximum amount of profit.

Marginal Cost

The cost of producing one additional unit of a product or service.