Refer to the Accompanying Production Possibilities Tables

question 333

Multiple Choice

$$\begin{array}{l}{ ~~~~~~~~~~~~~~~~~~\text { Germany Production Possibilities } } \\{ ~~~~~~~~~~~~~~~~~~~~~~~~~~\text { (Production Alternatives) } } \\\begin{array} { | l | c | c | c | c | c | c | } \hline \text { Product } & A & B & C & D & E & F \\\hline \text { Autos } & 0 & 4 & 8 & 12 & 16 & 20 \\\hline \text { Chemicals } & 40 & 32 & 24 & 16 & 8 & 0 \\\hline\end{array}\\\\{ ~~~~~~~~~~~~~~~~~~~~~~~\text { U.S. Production Possibilities } } \\{ ~~~~~~~~~~~~~~~~~~~~~~~~~~\text { (Production Alternatives) } } \\\begin{array} { | l | c | c | c | c | c | c | } \hline \text { Product } & A & B & C & D & E & F \\\hline \text { Autos } & 0 & 3 & 6 & 9 & 12 & 15 \\\hline \text { Chemicals } & 60 & 48 & 36 & 24 & 12 & 0 \\\hline\end{array}\end{array}$$ Refer to the accompanying production possibilities tables. Data are in millions of units. If Germany and the United States engage in trade, the mutually bene?cial terms of trade will be between

• A) 3 and 4 units of autos for 1 unit of chemicals.
• B) 2 and 4 units of autos for 1 unit of chemicals.
• C) 2 and 4 units of chemicals for 1 unit of autos.
• D) 0.33 and 0.5 units of autos for 1 unit of chemicals.

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Definitions:

Supply Curve

A visual chart that illustrates how the price of a product correlates with the amount of the product that sellers are prepared to offer.

Actual Price

The price at which goods are sold in the market, not necessarily equal to the listed or expected price.

Market Failures

Situations where the allocation of goods and services by a free market is not efficient, often justifying government intervention.

Overproduction

A situation where more goods are produced than can be sold, often leading to excess inventory and potential economic inefficiencies.