When Ukraine trades with Italy,
a. both countries are likely made better off.
b. only Italy benefits since Ukraine can produce all goods at a higher level of quality than Italy.
c. only Ukraine benefits since Italy's low wages guarantee that Italian firms will be profitable regardless of trade.
d. neither country will benefit since Ukraine is more efficient than Italy in the production of all goods.
a
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Refer to the production possibilities frontier in the figure above. Which of the following movements requires the largest opportunity cost, in terms of good Y forgone, per extra unit of good X?
A) from point a to point b B) from point b to point c C) from point c to point d D) from point d to point e
A competitive environment penalizes the inefficient use of resources. All but one of the following statements addresses why competition is so important for an efficient outcome. Which statement is not true?
a. Competition drives the price closer to the marginal cost of production. b. Consolidation leads to concentration of market power that allows providers to act like monopolists and price their products above marginal cost. c. Competition forces firms to improve efficiency or lose profits. d. More firms competing in a market means more substitutes, so consumers have more options, and their demand is less elastic.