Suppose That a Worker in Cornland Can Grow Either 40

question 48

Multiple Choice

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year,and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year.There are 20 workers in Cornland and 20 workers in Oatland.Which of the following statements is true?

• A)Both countries could gain from trade with each other.
• B)Neither country could gain from trade with each other because Cornland has an absolute advantage in both goods.
• C)Neither country could gain from trade with each other because neither one has a comparative advantage.
• D)Oatland could gain from trade between the two countries,but Cornland definitively would lose.

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Definitions:

Price Leadership

Price leadership occurs when a leading firm in an industry sets the price of goods or services, and other firms in the market follow suit, often seen in oligopolistic markets.

Price Wars

A competitive situation where retailers or producers continuously lower prices to undercut competitors, often leading to reduced profit margins for all involved.

Oligopolists

Oligopolists are firms or entities that operate in an oligopoly, a market structure characterized by a small number of sellers that have significant control over market prices and conditions.

Sales Growth

The increase in sales over a specific period, indicating the degree to which a company's revenue performance is improving or declining.