Figure 3-21 Uzbekistan's Production Possibilities Frontier

question 49

Multiple Choice

Figure 3-21
Uzbekistan's Production Possibilities Frontier
Azerbaijan's Production Possibilities Frontier
-Refer to Figure 3-21.Without trade,Uzbekistan produced and consumed 12 bolts and 36 nails and Azerbaijan produced and consumed 14 bolts and 24 nails.Then,each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 16 bolts for 38 nails.As a result,Uzbekistan gained

• A)2 bolts and 2 nails and Azerbaijan gained 2 bolts and 18 nails.
• B)4 bolts and 2 nails and Azerbaijan gained 2 bolts and 14 nails.
• C)14 bolts and 38 nails and Azerbaijan gained 16 bolts and 42 nails.
• D)16 bolts and 38 nails and Azerbaijan gained 16 bolts and 38 nails.

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Definitions:

Absolute Value

A mathematical function that describes the distance of a number on the number line from zero, disregarding its direction; always a non-negative value.

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply, minimizing the bias in calculation by taking the average of the initial and final quantities and prices.

Price Elasticity

A measure of how much the quantity demanded of a good changes in response to a change in its price, indicating how sensitive consumers are to price changes.

Elastic Section

Part of a demand curve where a small change in price leads to a relatively large change in quantity demanded, indicating high price sensitivity.