When a Nation Exports a Good or Service in Which

question 231

Multiple Choice

When a nation exports a good or service in which it has a comparative advantage,production of the good or service

• A) decreases.
• B) stays the same.
• C) increases.
• D) might change, but more information about what the country imports is needed to determine if production increases, decreases, or does not change.
• E) might change, but more information about what else the country exports is needed to determine if production increases, decreases, or does not change.

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Definitions:

Utility Function

An economic tool that describes how consumers rank different bundles of goods according to the level of satisfaction or utility those bundles provide.

Endowed

Provided with a large amount of a particular resource or quality.

Contract Curve

In economics, it represents the set of optimal points of exchange between two parties, where no further mutual benefit can be achieved through trade.

Edgeworth Box

A graphical representation of the trading possibilities and equilibrium between two individuals with fixed amounts of two goods.