Suppose That a Worker in Country a Can Make Either

question 75

Multiple Choice

Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Which of the following is true?

• A) Country B should produce iPads and Country A should produce iPhones, and they could both benefit from trade.
• B) Country B should produce iPhones and Country A should produce iPads, and they could both benefit from trade.
• C) Neither country would benefit from trade because there is no comparative advantage at producing these goods.
• D) Because Country B has an absolute advantage at producing iPads, it should specialize in their production.

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Definitions:

Disaffirm

To disaffirm means to legally reject or void a contract or agreement, usually because of the incapacity or unfairness to one party involved.

Minor

An individual who is under the age of majority, legally considered as not yet fully adult and under the care of a parent or guardian.

Rescind

To cancel or repeal a contract, agreement, or order, effectively bringing it to an end.

Restatement of Contracts

A legal treatise that organizes, explains, and clarifies the principles of contract law in the United States.