Suppose country A has a production possibilities frontier such that
and country B has a production possibilities frontier such that
and consumers in each country view x and y as perfect substitutes.Country B will produce
A) only x (=
) and trade for y.
B) only y (=
) and trade for x.
C) both x (= 20) and y (= 5) and trade x to get y.
D) both x (= 20) and y (= 5) and trade y to get x.
Correct Answer:
Verified
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