Table 3-4 Assume That the Farmer and the Rancher Can Switch Between

question 41

Multiple Choice

Table 3-4
Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate.

-Refer to Table 3-4.Without trade,the farmer produced and consumed 2 pounds of meat and 4 pounds of potatoes and the rancher produced and consumed 4 pounds of meat and 2 pounds of potatoes.Then,each person agreed to specialize in the production of the good in which they have a comparative advantage and trade 3 pounds of meat for 6 pounds of potatoes.As a result,the farmer gained

• A) 1 pound of meat and 2 pounds of potatoes and the rancher gained 0 pounds of meat and 5 pounds of potatoes.
• B) 1 pound of meat and 2 pounds of potatoes and the rancher gained 1 pound of meat and 4 pounds of potatoes.
• C) 3 pounds of meat and 6 pounds of potatoes and the rancher gained 5 pounds of meat and 6 pounds of potatoes.
• D) 4 pounds of meat and 12 pounds of potatoes and the rancher gained 6 pounds of meat and 8 pounds of potatoes.

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Definitions:

Small Business

An independently owned and operated company with limited size and revenue, according to industry standards, often characterized by a small workforce.

Independently Owned

Businesses or properties that are owned by individuals or private entities rather than corporations or chains.

Franchise

A business arrangement where one party (the franchisor) grants another party (the franchisee) the right to use its trademark or business model to offer, sell, or distribute goods or services.

Necessity-based Entrepreneurship

Entrepreneurial activities initiated as a result of limited job opportunities or economic necessity, rather than from the identification of a new business opportunity.