Suppose That Leslie and Hussein Can Either Make Salads or Grill

question 168

Multiple Choice

Suppose that Leslie and Hussein can either make salads or grill steaks. Their maximum outputs per hour are listed in the following table. Given the same quantity of resources, at what terms of trade relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontiers PPFs) ? $$\begin{array} { l l l l l } \hline & \begin{array} { l } \text { Maximum } \\\text { Number of Salads }\end{array} & \begin{array} { l } \text { Opportunity } \\\text { Cost of 1 Salad }\end{array} & \begin{array} { l } \text { Maximum } \\\text { Number of Steaks }\end{array} & \begin{array} { l } \text { Opportunity Cost } \\\text { of 1 Steak }\end{array} \\\hline \text { Leslie } & 9 & 1 / 3 \text { steak } & 3 & 3 \text { salads } \\\text { Hussein } & 12 & 1 / 2 \text { steak } & 6 & 2 \text { salads } \\\hline\end{array}$$

• A) 1 salad per 1 steak
• B) 2 salads per 1 steak
• C) 2.5 salads per 1 steak
• D) 3 salads per 1 steak
• E) 3.5 salads per 1 steak

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Definitions:

Credit Sales

Credit sales are transactions where the customer purchases goods or services on account, paying at a future date rather than at the time of purchase.

Finished Goods Inventory

The stock of completed products ready for sale but not yet sold at the end of an accounting period.

Required Production

The quantity of goods a company needs to produce in a specific period to meet its sales goals and inventory requirements.

Budgeted Sales

Budgeted sales refer to the projected amount of sales (in units or revenue) that a company expects to achieve within a certain period, as outlined in its budget.