Figure 3-19 Chile's Production Possibilities Frontier

question 26

Multiple Choice

Figure 3-19
Chile's Production Possibilities Frontier
Colombia's Production Possibilities Frontier
-Refer to Figure 3-19.Chile and Colombia would not be able to gain from trade if Colombia's opportunity cost of one pound of soybeans changed to

• A)1/2 pound of coffee.
• B)3/4 pound of coffee.
• C)4/3 pounds of coffee.
• D)2 pounds of coffee.

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Definitions:

Heuristic

A problem-solving approach using practical methods or shortcuts to generate satisfactory, but not necessarily optimal, solutions.

Prospect Theory

A behavioral economic theory that describes how people choose between probabilistic alternatives that involve risk.

Reference Point

A basis or standard for evaluation, assessment, or comparison; a point of reference.

Loss Averse

The psychological phenomenon where losses are perceived to be more significant than equivalent gains.