The Following Simple Two-Country Question Illustrates How Countries Are Made

question 35

Essay

The following simple two-country question illustrates how countries are made better off by trade in assets. Imagine that there are two countries, Home and Foreign, and that residents of each own only one asset, domestic land yielding an annual harvest of kiwi fruit. Assume that the yield on the land is uncertain. Half the time, Home's land yields a harvest of 100 tons of kiwi fruit at the same time as Foreign's land yields a harvest of 50 tons. The other half of the time the outcomes are reversed. The Foreign's harvest is 100 tons, but the Home harvest is only 50.
-Calculate the average, for each country of kiwi harvest.

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Definitions:

Controllable Costs

Expenses that can be directly controlled or influenced by a manager or decision-maker in the short term.

Common Costs

Expenses that cannot be directly attributed to a specific product or service but are shared among several projects or business units.

Strategic Business Unit

A division or unit within a company that has its own mission, objectives, and competitors, and is managed independently.

Revenue Centre

A segment or area of a business responsible for generating sales and revenue, without direct responsibility for profit or cost.