​Exhibit 2-10 Refer Exhibit 2-10

question 96

Multiple Choice

​Exhibit 2-10 Refer Exhibit 2-10. Which of the following statements is true?

• A)There would be no gains from trade between person A and person B because the opportunity cost of producing one unit of good X (or one unit of good
• Y)is the same for both persons.
• B)Both person A and person B will benefit from specialization and trade as long as person A specializes in the production of good X and person B specializes in the production of good Y.
• C)Both person A and person B will benefit from specialization and trade as long as person A specializes in the production of good Y and person B specializes in the production of good X.
• D)Both person A and person B will benefit from trade as long as person A produces both good X and good Y, and person B produces neither good.
• E)Both person A and person B will benefit from trade as long as person B produces both good X and good Y, and person A produces neither good.

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Definitions:

Average Fixed Costs

The constant production costs (unaffected by changes in output) divided by the production volume.

Swords

Swords are bladed weapons used historically and today for ceremonial, martial, or symbolic purposes, characterized by long blades for slashing or thrusting.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the quantity of output produced.

AFC

Average Fixed Cost, which is the fixed costs of production divided by the quantity of output produced; a measure of economies of scale.