Use the Information Below to Answer the Following Questions

question 150

Multiple Choice

Use the information below to answer the following questions.
Fact 2.4.2
Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour.
-Complete the following sentence. Given Fact 2.4.2,

• A)there will be gains from trade, no matter what Brenda and Agnes specialize in, as long as they specialize.
• B)there will be gains from trade only if Agnes specializes in the production of Y and Brenda in X.
• C)there will be gains from trade only if Agnes becomes faster at producing X.
• D)there will be no gains from trade because Agnes has an absolute advantage.
• E)there will be gains from trade if Agnes specializes in the production of X and Brenda in Y.

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Definitions:

Revenue Inelastic

A situation where the revenue from a product does not significantly change with fluctuations in its price, indicating a low sensitivity to price changes.

Total Revenues

Total Revenues are the overall income generated by a company from selling goods or services before deducting any costs.

Unit Elastic

Unit elastic describes a situation in which the percentage change in quantity demanded is equal to the percentage change in price, resulting in no overall revenue change for the supplier.

Income Elasticity

A measure of how much the demand for a product or service changes with a change in the consumer's income.