In an Open Economy in Which Only Two Goods Are

Multiple Choice

In an open economy in which only two goods are produced and possibly traded,we would find that

A) production occurs where the production possibility curve is tangent to a line with the slope equal to the ratio of the world relative prices.
B) production occurs where an indifference curve is tangent to the production possibilities curve.
C) consumption occurs where an indifference curve is tangent to the production possibilities curve.
D) consumption occurs where the production possibilities curve is tangent to a line with a slope equal to the ratio of the world relative prices.