A farmer has the ability to grow either corn or cotton or some combination of the two. Given no other information, it follows that the farmer's opportunity cost of a bushel of corn multiplied by his opportunity cost of a bushel of cotton

Using the figure above, suppose with no trade Liz and Joe each produce at point A on their respective PPFs. Then, Joe suggests that they specialize and trade. He would produce only salads and Liz would produce only smoothies

Then, Joe says, he would buy 16 smoothies from Liz at a price of 1.5 salads per smoothie. Liz should A) not accept Joe's offer since she would lose 2 smoothies and 2 salads. B) accept Joe's offer, as she will be as well off as with no trade. C) accept Joe's offer since she will gain 4 smoothies and 4 salads. D) accept Joe's offer since she will gain 4 salads. E) not accept Joe's offer, as the price he offers is too low for her to gain from trade.

When a firm's long-run average total cost falls as its output increases, the firm is experiencing

A) economies of scale. B) diseconomies of scale. C) constant returns to scale. D) decreasing marginal returns. E) decreasing cost of marginal returns.