In an Autarkic Situation, Demonstrate That a Country Will Be

question 190

Essay

In an autarkic situation, demonstrate that a country will be at its optimal production if it produces where an indifference curve is tangent to the production possibilities frontier.

---

Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, with all other factors being held constant.

Demand Curve

A graph showing the quantity of a good that consumers are willing and able to purchase at different prices.

Luxury Good

A product that is not necessary for basic survival but is deemed as highly-desirable within a culture or society, often associated with wealth or quality.

Income Elasticity

A measure of how the demand for a good or service changes in response to changes in consumer income.