Assume the Nation of Cropland Does Not Trade with the Rest

question 340

Multiple Choice

Assume the nation of Cropland does not trade with the rest of the world.By comparing the world price of corn to the price of corn in Cropland,we can determine whether

• A) consumer surplus exceeds producer surplus in Cropland.
• B) Cropland has an absolute advantage in producing corn.
• C) Cropland has a comparative advantage in producing corn.
• D) All of the above are correct.

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Definitions:

Substitute

a product or service that can be used in place of another to satisfy similar needs or desires.

Complement

Goods or services that, when used together, enhance each other's value to the consumer.

Income Increase

A rise in the amount of money received, especially on a regular basis, through work, investments, or business.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, and vice versa.