Consider Two Countries, Labeled 1 and 2 $\gt$ A₂:
A) Country 2 Will Not Produce Anything, Ceteris Paribus

question 62

Multiple Choice

Consider two countries, labeled 1 and 2. Each has the production function , = 1, 2. If the only difference between the two countries is that A₁ $\gt$ A₂:

• A) Country 2 will not produce anything, ceteris paribus.
• B) Country 2 will produce more than Country 1, ceteris paribus.
• C) Country 1 will produce more than Country 2, ceteris paribus.
• D) each will produce the same amount, ceteris paribus.
• E) Not enough information is given.

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Definitions:

Incomes

Income is the financial gain, commonly acquired on a consistent basis, either from employment or investment returns.

Demand

The desire and ability of consumers to purchase goods and services at various prices, determining the quantity of a product that will be sold in a market.

Cross-price Elasticity

A measure of how the quantity demanded of one good changes in response to a change in the price of another good.

Substitutes

Goods or services that can be used in place of each other, having the capability to satisfy similar needs or desires.