-According to the Above Table, Which Assumes That Opportunity Costs

question 137

Multiple Choice

-According to the above table, which assumes that opportunity costs of producing goods X and Y are constant, which of the following statements is TRUE?

• A) Chen will be willing to produce only good X and trade units of that good to Holly as long as he receives more than 0.5 units of good Y from her in exchange.
• B) Holly will be willing to produce only good X and trade units of that good to Chen as long as she receives less than 2.5 units of good Y in exchange.
• C) Chen will be willing to produce only good Y and trade units of that good to Holly as long has he receives less than 2 units of good X from her in exchange.
• D) Holly will be willing to produce only good Y and trade units of that good to Chen as long as she receives less than 0.4 unit of good X in exchange.

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Definitions:

Profit-Minimizing

A situation in which a business aims to reduce its profits to minimize taxes or for strategic reasons, contrary to typical profit-maximizing objectives.

Economic Profits

Economic Profits are the profit made by a company after deducting both explicit and implicit costs, representing the true profitability of the company.

Long Run

a period in which all factors of production and costs are variable, allowing firms to adjust all inputs.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for product differentiation and some degree of market power.