Suppose That a Worker in Freedonia Can Produce Either 6

question 94

Multiple Choice

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year,and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year.Each nation has 10 workers.For many years the two countries traded,each completely specializing according to their respective comparative advantages.Now,however,war has broken out between them and all trade has stopped.Without trade,Freedonia produces and consumes 30 units of corn and 10 units of wheat per year.Sylvania produces and consumes 10 units of corn and 30 units of wheat.The war has caused the combined yearly output of the two countries to decline by

• A)10 units of corn and 10 units of wheat.
• B)20 units of corn and 20 units of wheat.
• C)30 units of corn and 30 units of wheat.
• D)40 units of corn and 40 units of wheat.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded, usually depicted as downward sloping.

Slopes Downward

Used to describe a graph line that indicates a decrease in one variable as another variable increases, often related to demand curves in economics.

Nondiscriminating Monopolist

A nondiscriminating monopolist refers to a monopolist who charges the same price for each unit of the product sold to all consumers, unlike price discrimination where different prices are charged to different consumers.

Demand Curve

A graph demonstrating how the quantity of a good or service demanded varies with its price, typically downward sloping.