-Two Countries, Blue Violet and Sweet Pansy, Produce Only Two

question 404

Multiple Choice

-Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities. With specialization and trade, Sweet Pansy produces ________ and Blue Violet produces ________.

• A) 150 coffeepots; 150 teapots
• B) 150 teapots; 75 coffeepots
• C) 150 teapots and 150 coffeepots; nothing
• D) 100 teapots and 25 coffeepots; 100 teapots and 50 coffeepots

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Definitions:

Substitution Effect

refers to the change in consumption patterns due to a change in relative prices, leading consumers to substitute more expensive goods with cheaper alternatives.

Money Income

The total amount of monetary earnings or receipts accruing to an individual or household within a specified period.

Demand Change

Variations in the quantity of a product that consumers are willing and able to purchase at various price levels over a period.

First Class

Describes the highest quality or most expensive service, accommodation, or means of transportation available.