Production Possibilities Data for Gamma and Sigma

question 47

Multiple Choice

Production possibilities data for Gamma and Sigma.All data are in tons.
Gamma production possibilities:
Sigma production possibilities:

-On the basis of the above information:

• A) Gamma should export both tea and pots to Sigma.
• B) Sigma should export tea to Gamma and Gamma should export pots to Sigma.
• C) Gamma should export tea to Sigma and Sigma should export pots to Gamma.
• D) Gamma should export tea to Sigma,but it will not be profitable for the two nations to exchange pots.

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Definitions:

Entry of Firms

Refers to the process by which new companies enter an industry, increasing competition and potentially leading to lower prices and innovation.

Market Price

The present cost at which a service or asset is available for purchase or sale in a specific market.

Equilibrium Price

The cost at which the demand for a product or service matches the supply, leading to equilibrium in the market.

Marginal Cost Curve

depicts how the cost of producing an additional unit of output changes as the level of production is varied, typically rising after a certain point due to inefficiencies.