Suppose the World Economy Is Composed of Just Two Countries

question 16

Multiple Choice

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves
For the two countries are shown in the graphs. It can be deduced that

• A) Greece has a comparative advantage in chemicals.
• B) Greece has the absolute advantage in both products.
• C) Italy has a comparative advantage in chemicals.
• D) it is more costly in terms of resources to produce steel in Italy.

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Definitions:

Cognitive Psychology

A branch of psychology focused on studying mental processes such as perception, memory, thought, and problem-solving.

Humanistic Approach

A psychological perspective emphasizing individual potential and stressing the importance of growth and self-actualization.

Psychology

Psychology is the scientific study of the human mind and its functions, especially those affecting behavior in a given context.

Cognitive

Relating to mental processes such as attention, memory, language processing, perception, problem solving, and thinking.