Suppose There Are Two Countries (Home and Foreign) That Produce

question 115

Multiple Choice

Suppose there are two countries (Home and Foreign) that produce two
Goods.Home's wages are 100% greater than Foreign's wages.Will trade
Be possible between Home and Foreign?

• A)No, because Foreign's wages are lower than Home's wages.
• B)Yes, Foreign will be able to export both products to Home.
• C)Yes, as long as Home's marginal productivity of labor in one product is at least 100% higher than Foreign's marginal productivity of labor in
• The same product.
• D)No, because prices will be the same in each country.

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Definitions:

Marginal Cost

The extra expense derived from the production of an additional unit of a product or service.

Perfectly Competitive

A market structure characterized by a large number of firms selling identical products, with no single firm able to influence the market price.

Oligopolistic

Describes a market structure in which a few firms dominate the industry, leading to limited competition.

Marginal Cost

The rise in overall expenses resulting from the manufacture of an extra unit of a product or service.