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:

Upstream Price Discrimination

A pricing strategy where producers charge different prices for the same product or service to different retailers or stages in the supply chain.

Arbitrage

The simultaneous purchase and sale of an asset in different markets to profit from unequal prices.

Synergies

The combined benefits achieved when two or more entities work together, leading to greater efficiency or productivity than they would separately.

Acquisition

The process of acquiring control of another company or business entity through purchase or merger.