Homework Answers
1 - Option C
MPC = 4000/5000
= 0.8
2 - Option D
Export price index rises more than import price index
This will give a greater value of export and will give a favourable trade balance. It index of import will be higher , balance will be unfavourable.
3 - Option D
Resources are allocated such that each country specialises in the production of that good in whicb it has the comparitive advantage.
This is more important in order to bring the efficiency in production . Absolute advantage will not be a better answer.
4 - Option C
Import those goods which can be acquired cheaply than producing it within the country.
This will save the costs of the country.
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