Figure 9-2 -Refer to Figure 9-2.The World Price for Baskets Represents

question 339

Multiple Choice

Figure 9-2

-Refer to Figure 9-2.The world price for baskets represents

• A) the demand for baskets from the rest of the world.
• B) the supply of baskets from the rest of the world.
• C) the level of inefficiency in the domestic market caused by trade.
• D) the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage.

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Definitions:

Production Possibilities Frontier

Curve showing the combinations of two goods that can be produced with fixed quantities of inputs.

Pareto Optimal

A state of allocation of resources from which it is impossible to reallocate so as to make any one individual or preference criterion better off without making at least one individual or preference criterion worse off.

Marginal Rate

The rate at which one variable changes with respect to a minute change in another variable.

Cheese Doodles

A popular snack food made from cornmeal, cheese coating, and often baked or fried.