With One Hour of Labor Time Nation a Can Produce

question 4

Multiple Choice

With one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input) .The range of mutually beneficial trade between nation A and B is:

• A) 3Y < 3X < 5Y
• B) 5Y < 3X < 9Y
• C) 3Y < 3X < 9Y
• D) 1Y < 3X < 3Y

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Definitions:

Efficient

An attribute of a market or process where resources are allocated in the most effective way, yielding the maximum benefit for a given set of resources.

Competitive Equilibrium

Competitive Equilibrium is a state where supply equals demand, market resources are efficiently allocated, and no participant in the market can influence the price of goods or services.

Price Adjustment

The process by which prices of goods and services are altered to respond to changes in the market conditions.

Apples

A widely cultivated fruit that grows on apple trees, and is consumed worldwide for its sweet flavor.