Suppose That a Worker in Country a Can Make Either

question 138

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 a bundle of goods that Country B could potentially make?

• A) (400 iPhones, 2,000 iPads)
• B) (200 iPhones, 1,500 iPads)
• C) (300 iPhones, 450 iPads)
• D) (400 iPhones, 1 iPad)

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Definitions:

Futures Contracts

Agreements to buy or sell a particular commodity or financial instrument at a predetermined price at a specific time in the future.

Non-monetary Items

Items on the balance sheet that cannot be readily converted into cash and are not carried at their cash value, such as property, plant, and equipment.

Fair Value

The estimated market value of an asset or liability, based on current market conditions and comparable transactions, used in financial reporting to provide a clear picture of a company’s financial health.

Exchange Rate

An exchange rate is the value of one currency expressed in terms of another currency, used to convert different currencies for trade and financial transactions.