Table 3-3 Assume That Zimbabwe and Portugal Can Switch Between Producing Toothbrushes

question 153

Multiple Choice

Table 3-3
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.

-Refer to Table 3-3.Assume that Zimbabwe and Portugal each has 60 machine minutes available.Originally,each country divided its time equally between the production of toothbrushes and hairbrushes.Now,each country spends all its time producing the good in which it has a comparative advantage.As a result,the total output increased by

• A) 4 toothbrushes and 2 hairbrushes.
• B) 10 toothbrushes and 5 hairbrushes.
• C) 16 toothbrushes and 8 hairbrushes.
• D) 20 toothbrushes and 10 hairbrushes.

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Definitions:

Stock Price

The cost of purchasing a share of a company, reflecting the value of the company as determined by the supply and demand in the stock market.

Elasticity

An economic measure of how sensitive the quantity demanded or supplied of a good or service is to a change in price.

Option Price

The amount per share that an option buyer pays to the seller for the rights granted by an option contract, which can be influenced by factors such as the underlying asset's price, time to expiration, and volatility.

Call-Option

A financial contract giving the buyer the right, but not the obligation, to buy an asset at a specified price within a specific time period.