Scenario: Two Neighboring Countries, Sweetland and Sourland, Are Identical in Terms

question 191

Multiple Choice

Scenario: Two neighboring countries, Sweetland and Sourland, are identical in terms of size, population (800,000) , education of workforce, and value of natural resources owned.
-Refer to the scenario above.Sweetland and Sourland face identical production functions and have the same amounts of inputs available for production.GDP per capita is $45,000 in Sourland and $38,000 in Sweetland.Which of the following statements could help explain this discrepancy?

• A) The population of Sourland is more productive.
• B) Sweetland faces the Law of Diminishing Marginal Product.
• C) Sourland has greater efficiency of production.
• D) The workforce is smaller in Sourland.

---

Definitions:

Payback Period

The time it takes for an investment to generate cash flows sufficient to recover the initial cost of the investment.

Simple Rate of Return

Is the ratio of net annual cost savings to the initial investment, used to evaluate investment efficiency.

Cash Operating Costs

Expenses related directly to the operations of a business that are paid out in cash, excluding non-cash expenses like depreciation.

Useful Life

The estimated duration a fixed asset is expected to be useful for the purpose it was acquired, impacting depreciation calculation.