Suppose That a Worker in Boatland Can Produce Either 5

question 109

Multiple Choice

Suppose that a worker in Boatland can produce either 5 units of wheat or 25 units of fish per year, and a worker in Farmland can produce either 25 units of wheat or 5 units of fish per year. There are 10 workers in each country. No trade occurs between the two countries. Boatland produces and consumes 25 units of wheat and 125 units of fish per year, while Farmland produces and consumes 125 units of wheat and 25 units of fish per year. If trade were to occur, Boatland would trade 100 units of fish to Farmland in exchange for 100 units of wheat. If Boatland no longer grew any of its own wheat, how many units of fish could it now consume along with the 100 units of imported wheat?

• A) 25 units
• B) 75 units
• C) 150 units
• D) 250 units

Recognize the impact of organizational reliance on individuals and its role in assessing default risk.

Understand the protective role of loan covenant provisions against credit risks.

Evaluate the effectiveness of different approaches to credit analysis.

Comprehend the relevance of financial statement analysis, creditworthiness assessments, and the use of financial instruments in managing credit risk.

---

Definitions:

Actual Output

refers to the actual quantity of goods or services produced by a business within a given period.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products based on a relevant activity base, such as labor hours.

Indirect Labor

Workers or labor costs that support the production process but are not directly involved in the creation of the product.

Supplies

Items or materials used in the production process or in the operation of a business.