The Hypothetical Nations Wat and Xat Have the Production Possibilities

question 8

Multiple Choice

The hypothetical nations Wat and Xat have the production possibilities for rice and corn given in the accompanying tables. Assume that Wat originally produced rice and corn at combination C and that Xat originally produced combination B. If the nations now fully specialize based on comparative advantage, the total gains from specialization and trade are

• A)25 units of rice and 25 units of corn.
• B)50 units of rice and 50 units of corn.
• C)100 units of rice and 100 units of corn.
• D)100 units of rice and 150 units of corn.

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Definitions:

Contra Account

An account used in the general ledger to reduce the value of a related account when the two are netted together.

Balance Sheet Accounts

Accounts found on the balance sheet that include assets, liabilities, and shareholders' equity, reflecting the company's financial position at a specific point in time.

Major Sections

Main divisions within a document, report, or presentation that organize and categorize the content for easier understanding and navigation.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity of the company.