Introducing indifference curves into our trade model permits us to determine
A) where a nation chooses to locate along its production possibilities frontier in autarky.
B) the precise location of a nation's production possibilities frontier.
C) whether absolute cost or comparative cost conditions exist.
D) the currency price of one product in terms of another product.

Question

Quizplus · Accepted Answer

Introducing indifference curves allows us to determine where a nation chooses to locate along its production possibilities frontier in autarky. Indifference curves represent the different combinations of two goods that a consumer is indifferent between, and by combining them with the production possibilities frontier, we can determine where a nation will produce and consume goods given their preferences and constraints.

Introducing Indifference Curves into Our Trade Model Permits Us to Determine