If the Production Possibilities Curves of Two Countries Have the Same

question 55

Multiple Choice

If the production possibilities curves of two countries have the same slope,

• A)neither has a comparative advantage, and there are no gains from trade.
• B)although there is no comparative advantage, there are potential gains if there are differences in absolute advantage.
• C)neither has an absolute advantage, and there cannot be gains from trade.
• D)both have an absolute advantage and can gain from trade.

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Definitions:

Constrained Resource

Refers to a limited factor that restricts a company's ability to produce goods or services, such as a machine with finite capacity or limited labor.

Profitable Use

The application or employment of an asset or resource in a manner that generates income or profit.

Craft Shows

Events where artisans and craftsmen display and sell their handmade goods.

Split-Off Point

The stage in the production process where joint products can be recognized as separate products.