When two countries specialize and trade:
A. they can have consumption possibilities beyond their production possibilities.
B. surplus can be gained by both countries.
C. both can enjoy more output than either could produce on its own.
D. All of these are true.
Answer: D
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If an average cost pricing rule is imposed on the natural monopoly in the figure above, then the deadweight loss will be
A) $0. B) $1 million. C) $9 million. D) $16 million.
Explain the impact, if any, of each of the following on the production possibilities curve:
a. Europe's population fell by 30 to 60 percent following an outbreak of bubonic plague, also known as Black Death, in the fourteenth century. b. In the next 20 years, a sizeable proportion of the United States labor force is expected to include many people who are above the age of 65 . c. Canada recently discovered large reserves of shale gas (shale gas is natural gas that is trapped in fine-grained sedimentary rock).