Use the Following to Answer Question(s): Production Possibilities for Machinery

question 134

Multiple Choice

Use the following to answer question(s) : Production Possibilities for Machinery and Petroleum

-(Exhibit: Production Possibilities for Machinery and Petroleum) Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of units of machinery each country would have to forgo in order to produce the additional petroleum indicated.Based on the information in the exhibit, it is true that:

• A) the opportunity cost of machinery is more in the United States than in Mexico.
• B) machinery costs are the same in the United States and in Mexico.
• C) the opportunity cost of machinery is less in the United States than in Mexico.
• D) the opportunity cost of petroleum is less in the United States than in Mexico.

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Definitions:

Foreign Competition

The competition that domestic companies face from abroad, often referring to the goods and services offered by companies located in other countries.

Infant Industry Theory

An economic rationale for trade protectionism arguing that emerging domestic industries need protection from international competition until they become mature and competitive.

Protected

Safeguarded from harm or damage through legal, physical, or other means.

Emerging Industries

Sectors or industries that are in the early stages of development and show potential for significant growth and innovation in the future.