If Two Countries with Diminishing Returns and Different Marginal Rates

question 6

Multiple Choice

If two countries with diminishing returns and different marginal rates of substitution between two products were to engage in trade,then

• A) the marginal rates of substitution of both would become equal.
• B) the shapes of their respective production possibility frontiers would change.
• C) the larger of the two countries would dominate their trade.
• D) the country with relatively elastic supplies would export more.
• E) the opportunity costs for the smaller country would increase.

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Definitions:

Natural Selection

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