Suppose That the Nation of Rubium Has a Comparative Disadvantage

question 87

Multiple Choice

Suppose that the nation of Rubium has a comparative disadvantage in the production of cocoa. Rubium should:

• A) import cocoa.
• B) produce cocoa for domestic consumption only.
• C) produce cocoa for export only.
• D) specialize in the production of cocoa in an attempt to increase productive efficiency.

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Definitions:

Profit-maximizing Rule

A principle guiding businesses to set their output and prices at levels where marginal cost equals marginal revenue to maximize profit.

Cost-minimization Rule

A principle suggesting that firms seek to produce any given level of output at the lowest possible cost.

Wage Increase

An upward adjustment in wages or salaries, often to match inflation, improve living standards, or reward performance.

Labor Demand

The total amount of workers that employers are willing and able to hire at given wages over a certain period.