A Butcher Can Produce Only Sausages, and a Farmer Can

question 66

Multiple Choice

A butcher can produce only sausages, and a farmer can produce only potato chips. The butcher and the farmer like both foods. They:

• A) cannot gain from trade under any circumstances
• B) could gain from trade under certain circumstances, but not always
• C) could gain from trade because each would enjoy a greater variety of food
• D) could gain from trade only if they were indifferent between sausages and potato chips

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Definitions:

Single Product Firm

A company that specializes in the production and sale of one specific product or type of product.

Price Increase

A situation where the selling price of goods or services is raised by a company.

Unit Sales

The volume of product sold, representing a key measure of a company's performance and sales activity.

Variable Expense

Expenses that change in proportion to the amount of goods produced or the volume of sales, like materials or commissions on sales.