Suppose the World Economy Is Composed of Just Two Countries

question 74

Multiple Choice

Suppose the world economy is composed of just two countries: A and B.Each can produce steel or chemicals but at different levels of economic efficiency.The domestic production possibilities curves are shown in the graphs below. Refer to the above graphs and information.The assumption made about the domestic opportunity costs in countries A and B is that they are:

• A) constant.
• B) variable.
• C) increasing.
• D) decreasing.

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