Figure 3-1 -Refer to Figure 3-1.Assume Cliff and Paul Were Both Producing

question 142

Multiple Choice

Figure 3-1

-Refer to Figure 3-1.Assume Cliff and Paul were both producing wheat and corn,and each person was dividing his time equally between the two.Then each decides to specialize in the product in which he has a comparative advantage.Furthermore,they agree to trade 3 bushels of wheat for 3 bushels of corn.As a result of these new arrangements,Cliff is able to consume

• A)4 bushels of wheat and 3 bushels of corn, and this point lies on Cliff's production possibilities frontier.
• B)3 bushels of wheat and 3 bushels of corn, and this point lies outside of Cliff's production possibilities frontier.
• C)3 bushels of wheat and 2 bushels of corn, and this point lies on Cliff's production possibilities frontier.
• D)4 bushels of wheat and 3 bushels of corn, and this point lies outside of Cliff's production possibilities frontier.

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Definitions:

Creditor

An individual or institution that lends money or extends credit to another, with the expectation of being repaid.

Donee

An individual or entity that receives a gift or donation.

Vested

Having a secured right or interest in a property, benefit, or privilege that is not subject to being taken away.

Separation Agreement

A legally binding document that outlines the division of assets, liabilities, and other terms between parties who are separating or divorcing.