Mutually beneficial trade will occur whenever the exchange rate between the goods involved is set at a level where:
a. each country can export a good at a price below the opportunity cost of producing the good in the domestic market.
b. each country can import a good at a price below the opportunity cost of producing the good in the domestic market.
c. the exchange ratio is exactly equal to
the opportunity cost of producing the good in each country.
d. each country will specialize in the production of those goods in which it has an absolute advantage.
b
Exhibit 18-1
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Most movie theatres charge different prices to different groups of customers for movie admission but not on movie popcorn. Which of the following is a reason for this?
A) because the markup on movie popcorn is very high and movie theatres do not want to forgo this source of revenue B) because it is easier to limit resale in movie admissions but not in popcorn C) because the cost of operating a concession stand in a movie theatre is very high compared to the cost of showing a movie D) because the demand for popcorn is very high relative to the demand for movie admissions
The demand curve any monopolist uses in making output decisions is:
a. the same as the demand curve facing a perfectly competitive firm. b. vertical, because there are no close substitutes for its product. c. horizontal, because there are no close substitutes for its product. d. the same as the market demand curve. e. perfectly inelastic.