George and Michael Can Gain from Exchange

question 226

Multiple Choice

George and Michael can gain from exchange

• A) unless one has an absolute advantage in all goods.
• B) if each specializes in the production of the good for which he has the higher opportunity cost.
• C) if each specializes in the production of the good for which he has the lower opportunity cost.
• D) unless they have different opportunity costs.

---

Definitions:

Freud

Sigmund Freud, an Austrian neurologist who founded the discipline of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Defense Mechanism

Unconscious psychological strategies brought into play by individuals to protect themselves from anxiety or to provide a refuge from a situation with which they cannot currently cope.

Rationalization

A defense mechanism in which controversial behaviors or feelings are justified and explained in a seemingly rational or logical manner to avoid the true explanation.

Corporation

A corporation is a legal entity that is separate from its owners, providing them with limited liability. It is capable of owning assets, borrowing money, and being sued or suing.