If the U.S. can produce pizza for 5 each and barrels of beer for ...

[anshika]

If the U.S. can produce pizza for 5 each and barrels of beer for 25 each, and Germany can produce pizza for 7 each and barrels of beer for 21 each, then
 
  A) each country will produce both pizza and beer.
  B) the U.S. will produce beer and trade with Germany for pizza.
  C) the U.S. will produce pizza and trade with Germany for beer.
  D) All of the above.

Question 2

What is moral hazard?
 
  What will be an ideal response?

[recede]

Answer to Question 1

C

Answer to Question 2

The risk involved to one party when another party's behavior changes in a detrimental manner after a contract has been entered into. Usually, this is the result of asymmetric information.

[anshika]

Excellent

[mcarey591]

Gracias!