Specialization and Trade

question 108

Multiple Choice

Specialization and trade:

• A) increase the costs of production because of decreased output.
• B) decrease the per-unit costs of production because of economies of scale associated with large-scale production.
• C) create diseconomies of scale, raising the per-unit costs of production.
• D) only work within countries, not across countries.

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Definitions:

Price Ceiling

A government-imposed limit on how high a price is charged for a product, aimed at preventing prices from becoming excessively high.

Inefficiency

The state of not achieving maximum productivity or economic benefit, where resources are not used in the most effective way.

Market

Any structured system or venue where parties engage in exchange of goods, services, or information.

Price Ceiling

A legally established maximum price that can be charged for a good or service, intended to protect consumers from high prices.