-Refer to Exhibit 34-6

question 93

Multiple Choice

-Refer to Exhibit 34-6.Which of the following terms of trade would both countries agree on?

• A) 1 unit of wine = 2.5 units of cheese
• B) 1 unit of wine = 1.5 units of cheese
• C) 2.5 units of wine = 1 unit of cheese
• D) 1.5 units of wine = 1 unit of cheese
• E) none of the above

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Definitions:

Long-run Equilibrium

The state in which all factors of production and costs are variable, and firms make neither excess profit nor losses, indicating stability in the market.

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information, resulting in firms being price takers.

Price

The amount of money required to purchase a good or service; the value that must be exchanged to acquire a specific product.

Short-run Industry Supply

The total quantity of goods that producers in an industry are willing and able to sell at different prices in a short period, without changing production capacity.