The opportunity cost of producing one car in Germany is 2,000 bushels of wheat, and the opportunity cost of producing one car in Canada is 1,200 bushels of wheat. The two countries can realize mutual gains from trade if they agree on terms of trade that are
a. greater than 2,000 bushels of wheat per car
b. less than 1,200 bushels of wheat per car
c. greater than 1,200 bushels of wheat per car and less than 2,000 bushels of wheat per car, and Germany produces wheat
d. greater than 1,200 bushels of wheat per car and less than 2,000 bushels of wheat per car, and Germany produces cars
e. greater than 1,200 bushels of wheat per car and less than 2,000 bushels of wheat per car, and each country produces both goods
C
You might also like to view...
The leakage and injections approach implies that a government deficit is financed by
A) private saving less private investment plus net exports. B) private investment less private saving plus net exports. C) the trade deficit must always offset the government deficit. D) None of the above.
Refer to the labor market diagram where D is the labor demand curve, S is the labor supply curve, and MRC is the marginal resource (labor) cost curve. If this were a purely competitive labor market, the equilibrium wage rate and level of employment would be:
A. $5 and 3 respectively.
B. $6 and 4 respectively.
C. $7 and 5 respectively.
D. $8 and 3 respectively.