Suppose That a Worker in Radioland Can Produce Either 4

question 190

Multiple Choice

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. Also suppose that each country completely specializes in producing the good for which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, what is each country's maximum consumption of new radios and televisions per year?

• A) 100 televisions and 200 radios in Radioland, and 100 radios and 200 televisions in Teeveeland
• B) 300 televisions and 100 radios in Teeveeland, and 300 radios and 100 televisions in Radioland
• C) 300 televisions and 100 radios in Radioland, and 300 radios and 100 televisions in Teeveeland
• D) 400 televisions and 100 radios in Teeveeland, and 400 radios and 100 televisions in Radioland

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, distributing a portion of the company's earnings as decided by the board of directors.

Fair Value Method

An accounting approach wherein assets and liabilities are priced at their current market value to provide a more accurate valuation on financial statements.

Stock Investments

Investments in shares of public companies, aiming to generate income through dividends or capital gains.

Consolidation

Consolidation is the process of combining the financial statements of several subsidiaries or companies into the combined financial statements of the parent company to present as a single economic entity.