Suppose That Samsung's Production Costs Are the Same in Both

question 120

Multiple Choice

Suppose that Samsung's production costs are the same in both China and India.Also suppose that Samsung can produce cellphones in China for an average cost of $10 per phone for 300 million phones, $12 per phone for 200 million phones, and $15 per phone for 100 million phones.If customers in India demand 100 million phones and customers in China demand 200 million phones, Samsung's lowest cost option is to

• A) produce phones only in India and export phones to China.
• B) produce phones only in China and export phones to India.
• C) produce 100 million phones in India for Indian demand and produce 200 million phones in China for Chinese demand.
• D) produce 150 million phones in India for Indian demand and 50 million to export to China and produce 150 million phones in China for Chinese demand.

---

Definitions:

Aggregate-Demand Curve

A graph showing the relationship between the total quantity of goods and services demanded across all sectors of the economy and the price level.

Monetary Policy

Actions by a central bank or other regulatory authority to influence a nation's money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.

Fiscal Policy

Government policies related to taxation and public spending with the aim of influencing economic conditions, including growth, inflation, and unemployment rates.

Legislation

Laws and statutes that are enacted by a legislative body through its legislative process.