Suppose That the United States and Cuba Decide to Open

question 29

Multiple Choice

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ________ will gain from that trade because ________.

• A) both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs.
• B) neither country; their consumption possibilities will not change.
• C) only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change.
• D) only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change.

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Definitions:

Quantity Of Output

The total amount of goods or services produced by a company, sector, or economy during a specified period.

Marginal Revenue

The extra revenue earned by selling an additional unit of a product or service.

Total Revenue

The sum total of financial gains a company secures from its commercial transactions or service provisions during a certain interval.

Quantity Demanded

The aggregate quantity of a product or service that buyers are prepared to buy at a distinct price point, during a specific time frame.