Scenario: the Price of a Standard Basket of Goods in Country

question 150

Multiple Choice

Scenario: The price of a standard basket of goods in Country A is 10 pesos. The price of the same basket of goods in country B is 25 francs and $5 in the United States. Country A has an income per capita of 60,000 pesos, and country B has an income per capita of 100,000 francs. Assume full employment in both countries.
-Refer to the scenario above.Assume workers in Country A on average work 10 percent more than workers in Country B.What would happen to GDP per capita in Country B if workers in Country B were required to increase their work by 10 percent?

• A) Country B's GDP per capita would be equal to GDP per capita in Country A.
• B) The difference between GDP per capita in Countries A and B would increase.
• C) The difference between GDP per capita in Countries A and B would decrease.
• D) Country B's GDP per capita would remain constant.

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Definitions:

Carrying Cost

The total cost of holding inventory, including storage, insurance, taxes, and depreciation.

Fixed Cost

Costs that do not vary with the volume of output produced, such as rent, salaries, and insurance premiums.

Inventory

The total amount of goods and/or materials contained in a store or factory at any given time.

Inventory Management

The practice of ordering, storing, tracking, and controlling inventory to ensure an adequate supply without excessive oversupply or loss.