Multiple Choice
(Table: Shrimp and Banana Production Possibilities) Use Table: Shrimp and Banana Production Possibilities. The table shows the maximum number of shrimp and bananas that Issa and Lawrence can produce if they produce only one good. In the absence of trade, Issa produces and consumes nine shrimp and two bananas, and Lawrence produces and consumes three shrimp and two bananas. Now they decide to engage in trade. Which statement is INCORRECT?
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A) For both to become better off, each should specialize in the production of some good. However, since Henry is equally productive in both goods, it doesn't matter which good each specializes in.
B) For both to become better off, each should fully specialize in the production of the good in which she or he has a comparative advantage.
C) After trade, it is possible for Rita to consume nine shrimp and 2.5 bananas and for Henry to consume three shrimp and 2.5 bananas.
D) For each individual, the consumption point after trade will lie outside that individual's production possibility frontier.
Correct Answer:

Verified
Correct Answer:
Verified
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