Refer to Figure 5-6. What does D2 represent? A) the demand ...

[@Brianna17]

Refer to Figure 5-6. What does D2 represent?
 
  A) the demand curve reflecting marginal social benefits
  B) the positive externalities curve
  C) the demand curve reflecting marginal private benefits
  D) the social welfare curve

Question 2

Based on Scenario 1 above critically evaluate the following statement. Because of the productivity differential between the two men we can conclude that the young man has a comparative advantage in the production of everything over the older man.
 
  What will be an ideal response?

[mammy1697]

Answer to Question 1

A

Answer to Question 2

This statement is not true. Comparative advantage is achieved by being able to produce a good or service at a lower opportunity cost than someone else can. Here the only information that we have is that the young man is more productive than the older man. This isn't sufficient information to conclude that he has a comparative advantage in the production of everything.

[@Brianna17]

Gracias!

[isabelt_18]

Excellent