-Agnes Can Produce Either 1 Unit of X or 1

question 315

Multiple Choice

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. There can be gains from exchange

• A) if Agnes specializes in the production of X and Brenda specializes in the production of Y.
• B) if Agnes specializes in the production of Y and Brenda specializes in the production of X.
• C) only if Agnes becomes faster at producing X.
• D) only if Brenda becomes faster at producing X or Y.

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Definitions:

Motor Oil

A lubricant used in internal combustion engines to reduce wear on moving parts, clean, and cool the engine.

Gasoline

A volatile fuel used primarily in internal combustion engines.

Revealed Preference

A theory in economics that assumes the preferences of consumers can be revealed by their purchasing habits.

Prices

The amounts of money expected, required, or given in payment for goods or services.