Japan and China can both produce guns and rice. The country with the lowest opportunity cost of guns (in terms of rice) will
a. import guns.
b. have a comparative advantage in guns.
c. have an absolute advantage in guns.
d. have a comparative advantage in rice.
Question 2
Under a system of transferable pollution rights, which of the following firms is most likely to purchase a 500 permit to emit a ton of pollutants in to the atmosphere?
a. a non-polluting firm
b. a polluting firm that can reduce emissions at a cost of 500 per ton
c. a polluting firm that can reduce emissions at a cost of 200 per ton
d. a polluting firm that can reduce emissions at a cost of 600 per ton
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