Suppose That a Worker in Boatland Can Produce Either 5

question 109

Multiple Choice

Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year, and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year. There are 10 workers in each country. No trade occurs between the two countries. Boatland produces and consumes 25 units of wheat and 125 units of fish per year, while Farmland produces and consumes 125 units of wheat and 25 units of fish per year. If trade were to occur, Boatland would trade 100 units of fish to Farmland in exchange for 100 units of wheat. If Boatland no longer grew any of its own wheat, how many units of fish could it now consume along with the 100 units of imported wheat?

• A) 25 units
• B) 75 units
• C) 150 units
• D) 250 units

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Definitions:

Unrealized Gains

Increases in the value of assets that a company holds which are not realized through a sale transaction.

Marketable Trading Investments

Securities that a company holds primarily for the purpose of trading and expects to sell in the short term to generate profit.

Unrealized Gain

Profit that has been achieved on paper due to an increase in the value of an investment but has not yet been realized through a sale.