Two Countries That Specialize in Their Comparative Advantage and Trade

question 49

Multiple Choice

Two countries that specialize in their comparative advantage and trade with each other will increase: I. wages in both countries. II. total output in both countries. III. living standards in both countries.

• A) I and II only
• B) II and III only
• C) II only
• D) I, II, and III

Recognize human capital improvement through education.

Grasp the fundamental principles of microeconomics and macroeconomics.

Identify and categorize different types of economic resources and their roles in production.

Comprehend the distinction between microeconomics and macroeconomics topics.

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Definitions:

Pareto Optimal Allocation

A resource distribution scenario where no individual can be made better off without making at least one individual worse off.

Utility Function

A mathematical representation of how different combinations of goods or services provide levels of satisfaction or utility to an individual.

Initial Endowment

The initial allocation or distribution of resources, goods, or wealth among individuals or entities at the start of an economic experiment or model.

Apples

A type of fruit commonly consumed fresh, cooked, or as juice, recognized for its sweet or tart flavor.