If the economy is at full employment and war breaks out, we would move from

Bob and Bill can make 16 toys each if they devote 8 working hours in a day. Further, Bob can repair 4 cars and Bill can repair 2 cars, if they devote 8 working hours in a day. When these two individuals engage in trade, it would be advantageous for both if:

a. Bob specializes in the production of toys and Bill specializes in car repairing. b. Bob specializes in car repairing and Bill specializes in the production of toys. c. they specialize only in car repairing. d. they specialize only in the production of toys. e. they distribute their working hours evenly between the production of two goods.

In the supply and demand model, a subsidy granted to sellers is illustrated by

a. a downward shift in the demand curve, by the per unit amount of the subsidy. b. an upward shift in the demand curve, by the per unit amount of the subsidy. c. a downward shift in the supply curve, by the per unit amount of the subsidy. d. an upward shift in the supply curve, by the per unit amount of the subsidy.