Figure 34-7 ​

question 16

Multiple Choice

Figure 34-7
​
-In Figure 34-7, CF has the same slope as BG.AB and CD are the production possibilities of Pestoland and Pastaland, respectively.If both countries are given the opportunity to trade at prices indicated by CF,

• A)both will refuse trade.
• B)both will agree to trade.
• C)Pestoland will wish to trade, but Pastaland will not.
• D)Pastaland will wish to trade, but Pestoland will not.

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Definitions:

Elasticity of Demand

A measure of how the quantity demanded of a good or service changes in response to a change in its price.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level in a specified time period.

Elastic

describes a situation where the quantity demanded or supplied changes significantly in response to price changes.

Total Revenue

The entire amount of income generated by the sale of goods or services before any expenses are deducted.