In Which of the Following Cases Should the United States

question 19

Multiple Choice

In which of the following cases should the United States produce more noodles than it wants for its own use and trade some of those noodles to Italy in exchange for wine?

• A)Americans know less than Italians know about cooking noodles.
• B)The United States has an absolute advantage over Italy in producing noodles.
• C)Italy has a comparative advantage over the United States in producing wine.
• D)The opportunity cost of producing a gallon of wine is the same for Italy as it is for the United States.

---

Definitions:

Nonexcludable

A characteristic of public goods where it is not feasible to exclude individuals from using the good, leading to potential free-rider problems.

Common Resource

A resource, like air or water, that is accessible to all members of a society but subject to overuse and depletion.

Negative Externalities

Costs suffered by a third party due to an economic transaction they were not involved in.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.