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Suppose an Economy Is Perfectly Competitive, Production Is Subject to Increasing

Question 9

Multiple Choice

Suppose an economy is perfectly competitive, production is subject to increasing costs, and there is completely free and costless trade. Then in equilibrium:


A) the marginal rate of substitution in the consumption is equal to the marginal rate of transformation in production.
B) the economy's production and consumption points are distinct.
C) the marginal rate of substitution in consumption is equal to the ratio of product prices.
D) All of the above.
E) None of the above.

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