Suppose That a Worker in Cornland Can Grow Either 40

question 48

Multiple Choice

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year,and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year.There are 20 workers in Cornland and 20 workers in Oatland.Which of the following statements is true?

• A)Both countries could gain from trade with each other.
• B)Neither country could gain from trade with each other because Cornland has an absolute advantage in both goods.
• C)Neither country could gain from trade with each other because neither one has a comparative advantage.
• D)Oatland could gain from trade between the two countries,but Cornland definitively would lose.

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Definitions:

Certification Process

The formal procedure by which an individual or organization is assessed and confirmed to meet specific standards or qualifications.

Resistance Point

In negotiation, the least favorable point at which one will accept a deal. Beyond this point, the party would prefer to walk away from negotiations.

Bargaining Committee

A group of individuals, often from a labor union, designated to negotiate terms of employment, such as wages and working conditions, with an employer.

Hourly Wage

The amount of money paid to an employee for each hour of work performed.