Suppose Country a Has a Production Possibilities Frontier Such That

question 27

Multiple Choice

Suppose country A has a production possibilities frontier such that and country B has a production possibilities frontier such that and consumers in both countries view x and y as perfect substitutes.Country B will produce

• A) only x (= ) and trade for y.
• B) only y (= ) and trade for x.
• C) both x (= 40) and y (= 20) and trade x to get y.
• D) both x (= 40) and y (= 20) and trade y to get x.