If Individuals a and B Can Both Produce Only Goods

question 93

Multiple Choice

If individuals A and B can both produce only goods X and Y, and A does not have a comparative advantage in the production of either X or Y, then we know

• A)B has an absolute advantage in the production of X and Y.
• B)A and B have the same opportunity costs for X and for Y.
• C)B has a comparative advantage in the production of both X and Y.
• D)the gains from trade will be large but only in one direction.
• E)A must have lower opportunity costs of production for both goods.

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Definitions:

Stocks

Financial instruments representing ownership interests in corporations, providing holders with a claim on part of the corporation's assets and earnings.

Mean

The arithmetic average of a set of numbers, calculated by adding them all up and dividing by the count of the numbers.

Variance

The average of the squared differences from the Mean, providing a measure of how spread out a data set is.

Expected Value

The weighted average of all possible values that a random variable can take on, weighted by the probabilities of those values.