Refer to the scenario above. Which of the following is true?
A) Both the workers should specialize in the production of Good Y.
B) Worker 1 should produce Good Y and Worker should produce Good X.
C) Worker 1 should produce Good X and Worker should produce Good Y.
D) Both the workers should specialize in the production of Good X.
C
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A decrease in the money wage rate increases ________ and an increase in the full-employment quantity of labor increases ________
A) the SAS and the LAS; only the SAS B) the SAS and the LAS; only the LAS C) only the SAS; the SAS and the LAS D) only the LAS; the SAS and the LAS
The trade-creation effect refers to:
a. a reduction in economic efficiency as a result of a preferential trade agreement. b. a production shift to a higher-cost producer as a result of a preferential trade agreement. c. the outcome of a preferential trade agreement that allows a country to obtain goods at a lower cost than is available at home. d. diversion of production from a country that has comparative advantage. e. a production shift to a country that does not have comparative advantage.