Question

Which of the following is NOT an assumption of the trade model

1.Scarcity

2.Rational thinking

3.Diminishing marginal returns

4.Opportunity cost

Answer 1

Scarcity, rational thinking and opportunity cost are all the assumptions of trade model where does emissions are resources are scares and people are rational thinkers and if you will choose the one which has less opportunity cost

Therefore (1,2,4) are wrong

Diminishing marginal returns is not an assumption of the trade model because in the trade model constant returns to scale is actually considered as an assumption and that is the reason why

(3) is the answer to this question