Question

Two countries decide to engage in specialization and exchange with each other. As a result, we...

Two countries decide to engage in specialization and exchange with each other. As a result, we can expect:
a. the production possibilities curve for each country to remain unchanged.
b. the production possibilities curve for each country to shift inwards.
c. the production possibilities curve to shift outwards for the exporter and inwards for the importer.
d. the production possibilities curve for each country to shift outwards

Consider a normal good produced in a competitive market with many buyers and sellers. If the market is initially in equilibrium, and there is a 10% decrease in the cost producing this good then we can expect the equilibrium price to _____ and the equilibrium quantity to _____.

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Answer #1

Two countries decide to engage in specialization and exchange with each other, as a result we can expect:

Answer. The production possibility curve for each country to shift outwards.

Consider a normal good produced in a competitive market with many buyers and sellers. If the market is initially in equilibrium, and there is a 10% decrease in the cost producing this good then we can expect the equilibrium price to _decrease____ and the equilibrium quantity to ___increase__.

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