If the opportunity costs of production for two goods is different between two countries, then
A) only one country can be made better off by trade.
B) trade will only benefit both countries if one can lower its opportunity costs.
C) trade cannot benefit either country.
D) mutually beneficial trade is possible.
Question 2
Some policymakers have argued that products like cigarettes, alcohol, and sweetened soda generate negative externalities in consumption.
All else equal, if the government decided to impose a tax on soda, the equilibrium quantity of soda would ________ and the equilibrium price of soda would ________.
A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase
In nest, under production
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