Multiple Choice
Reference: Ref 2-5 (Table: Production Possibilities for the United States and Mexico) Using the table on Production Possibilities for the United States and Mexico, assume each country specializes in the good for which it has a comparative advantage. Which of the following answers identifies a trade price that both countries would find acceptable? (Units are in tons.)
A) 0.2 potato for one corn < Trade price < five corns for one potato
B) 0.125 potato for one corn, < Trade price < eight potatoes for one corn
C) five corns for one potato < Trade price < eight corns for one potato
D) 0.125 potato for one corn, < Trade price < five potatoes for one corn
Correct Answer:
Verified
Correct Answer:
Verified
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