If Tom and Di specialize in producing the goods in which he and ...

[ereecah]

If Tom and Di specialize in producing the goods in which he and she have a comparative advantage and they exchange goods, then ________.
 
  A) each will produce a combination of goods that is within her/his production possibility frontier
  B) they will lose because they are no longer able to produce and consume both goods
  C) each will gain because each can consume a combination of goods that is outside her/his production possibility frontier
  D) one of them will gain and the other will lose

Question 2

The figure above shows the market for milk in Cowland. If a subsidy paid to producers of 1 per gallon of milk is introduced, what is the price that consumers pay?
 
  A) 3.00 a gallon
  B) between 3.00 and 4.00 per gallon
  C) 4.00 a gallon
  D) between 4.00 and 5.00 per gallon

[mcomstock09]

Answer to Question 1

C

Answer to Question 2

B