The Land of Narnack Has Very Infertile Soil but a Large

question 41

Multiple Choice

The land of Narnack has very infertile soil but a large supply of oil. What action should Narnack take? Narnack should

• A) specialize in the production of crude oil and trade this for grain and other food products.
• B) grow food anyway because its people will need it for survival.
• C) focus on attracting tourists to its country and thus purchase the needed supplies of food.
• D) specialize in the production of food products such as cereals and bread.
• E) import oil to satisfy the country's need for gasoline.

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Definitions:

Market Economy

An economic system in which supply and demand determine the production and allocation of resources through decentralized decision-making.

High-Cost Producers

Businesses or entities that incur higher expenses in the production of goods or services, often leading to higher selling prices to maintain profitability.

Low-Cost Producers

Companies or entities that can produce goods or services at a lower expense than competitors, often due to efficiencies or advantages.

Market System

An economic system in which decisions regarding investment, production, and distribution are guided by the price signals created through the forces of supply and demand.