For the next three questions, refer to the production possibilities schedules sh

Question

For the next three questions, refer to the production possibilities schedules shown below: 37. In country A the opportunity cost (relative price) of one paper clip is: a. 2rubber bands. b. 1rubber band. c. 1/2rubber band. d. 1/4rubber band. 38. The schedule indicates that: a. country A should export rubber bands to country B and import country B's paper clips. b. country A should export paper clips to country B and import country B's rubber band. c. country A should produce both rubber band and paper clips and not trade with country B.

Explanation / Answer

1)1/2 rubber band

2) country A has a comparative advantage in producing rubber band and paper clips

3) country A should produce both rubber band and paper clips and not trade with country B

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