Suppose That a Worker in Country a Can Produce Either

question 16

Multiple Choice

Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. For a worker in Country B, the trade-off to producing one tomato is:

• A) 2 bananas.
• B) 3 bananas.
• C) 4 bananas.
• D) 5 bananas.

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Definitions:

Market Risk Premium

The additional profit that an investor predicts they will earn from a risky market portfolio as opposed to risk-free financial instruments.

Expected Return

The anticipated average return on an investment, taking into account all potential outcomes and their probabilities.

Probability

The measure of the likelihood that an event will occur, quantified as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Return Percentage

The amount of gain or loss on an investment over a specified period, presented as a percentage of the investment's initial cost.