A straight line production possibilities curve implies increasing opportunity costs

Briefly explain the major argument of the factor endowment trade theory

What will be an ideal response?

The market for used cars is shown in the above figure. Buyers cannot tell whether any given car is a lemon. Forty percent (40%) of all cars are lemons. Which of the following statements is true?

A) All of the cars will be sold. B) No cars will be sold. C) Only lemons will be sold. D) Ten percent of the used cars sold will be lemons.