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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Definitions:

Total Revenue

The total receipts a firm receives from sales of its product or services.

Total Revenue

The overall amount of money generated by a firm from selling its goods or services, calculated as the unit price multiplied by the quantity sold.

Perfectly Inelastic Demand

The case in which the quantity demanded does not respond at all to changes in the price; the demand curve is a vertical line.

Demand Curves

A graph representing the relationship between the price of a good and the quantity of that good buyers are willing to purchase at various prices.