Ben bakes bread and Shawna knits sweaters. Ben and Shawna both like to eat bread

Question

Ben bakes bread and Shawna knits sweaters. Ben and Shawna both like to eat bread and wear sweaters. In which of the following cases is it impossible for both Ben and Shawna to benefit from trade?

Select one:

a. Ben cannot knit sweaters and Shawna cannot bake bread.

b. Ben is better than Shawna at baking bread and Shawna is better than Ben at knitting sweaters.

c. Ben is better than Shawna at baking bread and at knitting sweaters.

d. Both Ben and Shawna can benefit from trade in all of the above cases.

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is Select one:

a. positive and therefore the good is an inferior good.

b. positive and therefore the good is a normal good.

c. negative and therefore the good is a normal good.

d. negative and therefore the good is an inferior good.

Explanation / Answer

1.d option is correct both ben and shawna can benefit from trade in all of the above cases because both like to eat breads and wearing sweaters which helps to increase their benefits.

2.Option b is correct positive and therefore the good is a normal good beacuse normal goods are those goods the demand for which tends to increases following increases in consumer income. so there is a positive realtionship between consumer income and demand of quantity.

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