Suppose an American Worker Can Make 100 Chairs or Catch

question 10

Multiple Choice

Suppose an American worker can make 100 chairs or catch 900 fish per day.On the other hand,a Chilean worker,can make 40 chairs or catch 400 fish per day.The United States has an absolute advantage in the production of both fish and chairs.This means that the United States:

• A) should produce only chairs and trade with Chile to get fish.
• B) should produce only fish and trade with Chile to get chairs.
• C) should take advantage of Chile by trading with them.
• D) can produce more fish and chairs than Chile given the same amount of workers.

---

Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing a measure of consumer benefit.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, typically viewed as a measure of producer welfare.

Consumer Surplus

The divergence between the sum consumers are prepared to pay for a product or service and the sum that is actually paid.

Maximum Price

A price ceiling set by a government or regulatory body, above which a particular good or service cannot be sold, often to protect consumers.