Quizzol

QUESTION:

The interaction of individual choices

Individuals living in the state of Kansas like to consume both soybeans and blueberries. While it is possible for farmers to grow both crops in Kansas, almost no farmers elect to use their land to grow blueberries. Instead, every year, Kansas exports soybeans and imports blueberries from nearby Michigan, where growers specialize in blueberries.

Which of the following principles of economic interaction best describes this scenario?

When markets do not achieve efficiency, government intervention can improve overall welfare.

There is a tradeoff between equality and efficiency.

Trade can make everyone better off.

All costs are opportunity costs.

ANSWER:

Which of the following principles of economic interaction best describes this scenario?

When markets do not achieve efficiency, government intervention can improve overall welfare.

There is a tradeoff between equality and efficiency.

Trade can make everyone better off.

All costs are opportunity costs.

Points:

1 / 1

There are gains from trade when producers specialize. Michigan, with its sandy soil, specializes in blueberries while Kansas specializes in soybeans. Specialization allows the two states to produce more soybeans and blueberries as a whole than if both states attempted to produce everything. Trade ensures that people in both states have enough soybeans and blueberries to eat.

Posted by Cleveland on August 28, 2024