A Rancher Can Produce Only Beef,while a Farmer Can Produce

question 12

Multiple Choice

A rancher can produce only beef,while a farmer can produce only potatoes.If the rancher and the farmer like both foods,which of the following is most likely

• A)They cannot gain from trade.
• B)They could gain from trade under certain circumstances, but not always.
• C)They could gain from trade because each would enjoy a greater variety of food.
• D)They could gain from trade only if each were indifferent between beef and potatoes.

---

Definitions:

Free Entry And Exit

Conditions in a market where firms or producers can freely enter or leave the market without facing any legal, social, or economic barriers.

Perfectly Competitive Market

A market structure where many firms sell identical products, leading to price taking behaviour by all firms.

Short Run

A period of time in which at least one input, such as equipment or buildings, is fixed and cannot be changed.

Ceteris Paribus

A Latin term meaning "all other things being equal," used in economics to describe a situation where all variables except those under immediate consideration are held constant.