Suppose the Cost of Producing Two Goods,x and Y,can Be

question 53

Multiple Choice

Suppose the cost of producing two goods,x and y,can be represented as C = ax + by + cxy.If there are economies of scope,then which of the following must be TRUE?

• A) c > 0
• B) a + b = -c
• C) c = 0
• D) c < 0

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Definitions:

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than others.

Domestic Price

The price level of goods and services within a country's border, reflecting the domestic market's supply and demand conditions.

Shoes

Footwear crafted from various materials designed to protect and comfort the human foot while enabling mobility, often reflecting fashion and social status.

International Trade

The exchange of goods and services across national borders, driven by the principle of comparative advantage.