Suppose the World Economy Is Composed of Just Two Countries

question 304

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. Assume that prior to specialization and trade, Italy and Greece preferred points I and G on their respective production possibilities curves. As a result of complete specialization according to comparative advantage, the resulting gains in total output will be

• A)5 steel and 15 chemicals.
• B)10 chemicals.
• C)15 steel and 5 chemicals.
• D)25 steel.

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Definitions:

Universal

Pertaining to or characteristic of all human beings; applicable everywhere or in all cases.

Conservation Tasks

A set of cognitive operations used in developmental psychology to assess a child's ability to recognize that certain properties of objects or substances remain the same in spite of changes in their form or appearance.

Collectivist Culture

Identifies societies or groups where people prioritize the needs and goals of the group over individual desires or achievements.

Connectedness

Consists of two dimensions: mutuality, sensitivity to and respect for others’ views; and permeability, openness to others’ views.