Author Question: If two countries with diminishing returns and different marginal rates of substitution between two ... (Read 26 times)

mrsjacobs44 · **on:** Jun 30, 2018

If two countries with diminishing returns and different marginal rates of substitution between two products were to engage in trade, then

A) the marginal rates of substitution of both would become equal.
B) the shapes of their respective production possibility frontiers would change.
C) the larger of the two countries would dominate their trade.
D) the country with relatively elastic supplies would export more.
E) the opportunity costs for the smaller country would increase.

Question 2

The most common form of tariff is a countervailing duty.

Indicate whether the statement is true or false