Fact Pattern 18-A Refer to the Following Data

question 104

Multiple Choice

Fact Pattern 18-A
Refer to the following data:
Alpha can produce either 18 tons of oranges or 9 tons of apples in a year, while Omega can produce either 16 tons of oranges or 4 tons of apples.
-Refer to Fact Pattern 18-A.Which of the following statements is true?

• A)Alpha should export to Omega, but Omega should not export to Alpha.
• B)Since Alpha has an absolute advantage in both goods, no mutual gains from trade are possible.
• C)If Alpha specializes in growing apples and Omega specializes in growing oranges, they could both gain by specialization and trade.
• D)If Alpha specializes in growing oranges and Omega specializes in growing apples, they could both gain by specialization and trade.
• E)Since Alpha has a comparative advantage in producing both goods, no mutual gains from trade are possible.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers at various prices.

Price Elasticity

The estimation of demand's reaction to the alteration of a good's price.

Midpoint Formula

A method used in geometry to find the midpoint of a line segment between two points by averaging the x and y coordinates.

Demand

The consumer's willingness and ability to purchase goods or services at various price points at a given time.