Suppose That a Worker in Country a Can Produce Either

question 118

Multiple Choice

Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. Country B will benefit from trade if the country specializes in _____ because _____

• A) bananas; it has a comparative advantage at producing bananas.
• B) tomatoes; its opportunity cost of tomatoes is higher than that of Country A.
• C) tomatoes; its opportunity cost of tomatoes is lower than that of Country A.
• D) bananas; it has an absolute advantage at producing bananas.

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Definitions:

Barriers To Entry

Factors that prevent or hinder the ability of a new competitor to enter an industry or market.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for some degree of market power.

Demand Curves

Demand curves graphically represent the relationship between the price of a good or service and the quantity demanded by consumers, typically showing a downward slope.