Given Below Is the Production Possibilities Schedule for a Small

question 87

Multiple Choice

Given below is the production possibilities schedule for a small island nation in South Pacific that produces capital and consumer goods.Table 2.3

-If a nation specializes in activities in which opportunity costs are the lowest and then trades with other nations, it is most likely to:

• A)have a higher standard of living for its citizens than it would if it did not specialize and then trade.
• B)have a lower standard of living for its citizens than it would if it did not specialize and then trade.
• C)create as much wealth for its citizens as it could if it did not specialize and then trade.
• D)benefit in the short run but incur heavy loss in the long run.
• E)incur heavy loss in the short run and eventually cease production in the long run.

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