(Table) Allow the United States to Produce at Point C

question 272

Multiple Choice

(Table) Allow the United States to produce at point C and Chile to produce at point K on the production possibilities schedules. Now, let the United States trade away 6 loaves of bread in return for 20 bushels of avocados. Which statement is TRUE?

• A) Both countries are better off from this trade because they both consume outside their production possibilities frontier (PP
• F).
• B) Both countries are better off from this trade because they both produce outside their PPF.
• C) Only the United States is better off from this trade.
• D) Only Chile is better off from this trade.

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Definitions:

Investment Required

The total amount of capital needed to undertake a specific project, purchase, or investment.

Project Profitability Index

A calculation used to determine the relative profitability of a project by dividing the present value of future cash flows by the initial investment cost.

Salvage Recovered

The amount of money or value received from selling off the remains of assets after their useful life is over or after a casualty loss.

Discount Rate

Used to calculate the present value of future cash flows, reflecting the opportunity cost of capital investment.