Given the production-possibilities-frontier/community-indifference-curve diagram below,Where P is the autarky production point, C is the free trade consumption point, P₁ Represents autarky prices, and P₂ represents free-trade prices, the free-trade production Point is __________ and the autarky consumption point is __________.

Question

Given the production-possibilities-frontier/community-indifference-curve diagram below,Where P is the autarky production point, C is the free trade consumption point, P₁ Represents autarky prices, and P₂ represents free-trade prices, the free-trade production Point is __________ and the autarky consumption point is __________.
Given the production-possibilities-frontier/community-indifference-curve diagram below,Where P is the autarky production point, C is the free trade consumption point, P<sub>1</sub> Represents autarky prices, and P<sub>2</sub> represents free-trade prices, the free-trade production Point is __________ and the autarky consumption point is __________. A) R; G B) R; P C) P; G D) G; P

Quizplus · Accepted Answer

The free-trade production point is R, which is where the community indifference curve is tangent to the production possibilities frontier under free trade. The autarky consumption point is P, which is where the community indifference curve is tangent to the autarky production point. Answer: A The difference between S₀ and S₁ satisfaction levels is called the "consumption gain" (or "gains from exchange"). This refers to the increase in consumer welfare that occurs when free trade allows them to consume at point C instead of point P.

Given the Production-Possibilities-Frontier/community-Indifference-Curve Diagram Below,Where P Is the Autarky Production