Use the Information Below to Answer the Following Questions

question 51

Multiple Choice

Use the information below to answer the following questions.
Fact 2.4.1
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-Given Fact 2.4.1, Andy and Rolfe

• A)can gain from trade if Andy specializes in butter production and Rolfe specializes in bread production.
• B)can gain from trade if Andy specializes in bread production and Rolfe specializes in butter production.
• C)cannot gain from trade.
• D)can trade, but only Rolfe will gain.
• E)can trade, but only Andy will gain.

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Definitions:

Assets

Assets are resources owned by a business or individual that have economic value and can bring about future benefits, such as cash, real estate, and machinery.

Liabilities

Financial obligations or debts of a business that arise during the course of its operations, required to be settled over time.

Owner's Equity

The residual interest in the assets of an entity after deducting liabilities, representing the capital owned by the shareholders or owner.

Cash Budget

A budget of estimated cash receipts and payments.