In Which of the Following Cases Should the United States

question 19

Multiple Choice

In which of the following cases should the United States produce more noodles than it wants for its own use and trade some of those noodles to Italy in exchange for wine?

• A)Americans know less than Italians know about cooking noodles.
• B)The United States has an absolute advantage over Italy in producing noodles.
• C)Italy has a comparative advantage over the United States in producing wine.
• D)The opportunity cost of producing a gallon of wine is the same for Italy as it is for the United States.

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Definitions:

Elastic Demand

A situation in which the demand for a product is sensitive to price changes, meaning a small price change can cause a large change in quantity demanded.

Airline Prices

The cost of air travel tickets, influenced by factors such as fuel prices, demand, seasonality, and market competition.

Price-Inelastic

Describes a situation where the demand for a good or service changes little in response to changes in price.

Business Travelers

Individuals who travel as part of their job or business, often to attend meetings, conventions, or to conduct business with other companies.