The Improvement in Outcomes That Occurs When Specialized Producers Exchange

question 21

Multiple Choice

The improvement in outcomes that occurs when specialized producers exchange goods and services is called:

• A)the gains from trade.
• B)absolute advantage.
• C)comparative advantage.
• D)specialization.

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Definitions:

Indifference Curves

Graphical representations in economics, showing different combinations of two goods among which a consumer is indifferent, revealing preferences and trade-offs.

Perfect Substitutes

Products or services that can be used in exactly the same way, to the extent that one can replace the other in consumption without affecting utility.

Right Angles

Angles that measure exactly 90 degrees.

Indifference Curves

Graphical representations used in microeconomics to show combinations of two goods that provide equal satisfaction and utility to a consumer.