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Refer to the Figure Shown, Which Represents the Production Possibilities

Question 8

Multiple Choice

  Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. After examining the production possibilities of each country, what can we surmise about the opportunity cost of a car for Country A? A)  It is lower than that of Country B; Country A should specialize in cars and trade with Country B for trucks. B)  It is higher than that of Country B; Country A should specialize in cars and trade with Country B for trucks. C)  It is the same as that of Country B; Country A will not benefit from trade and should refrain. D)  It should have no effect on Country A's decision to trade; absolute advantage drives that decision. Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. After examining the production possibilities of each country, what can we surmise about the opportunity cost of a car for Country A?


A) It is lower than that of Country B; Country A should specialize in cars and trade with Country B for trucks.
B) It is higher than that of Country B; Country A should specialize in cars and trade with Country B for trucks.
C) It is the same as that of Country B; Country A will not benefit from trade and should refrain.
D) It should have no effect on Country A's decision to trade; absolute advantage drives that decision.

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