The Figure Above Show Liz's and Joe's Production Possibilities for Salads

question 94

Multiple Choice

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies.
-Using the figure above,suppose with no trade Liz and Joe each produce at point A on their respective PPFs.Then,Liz suggests that they specialize and trade.She would produces only smoothies and Joe would produce only salads.Then she would sell 10 smoothies to Joe at a price of 2.5 salads per smoothie.In this scenario,

• A) Liz gains 10 smoothies and 5 salads, and Joe gains 5 smoothies.
• B) Liz gains 5 smoothies, and Joe gains 10 smoothies.
• C) Liz gains 10 smoothies, and Joe loses 5 smoothies.
• D) Liz gains 5 smoothies and 5 salads, and Joe loses 5 salads.
• E) None of the individuals gain from trade.

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Definitions:

Female to Male Earnings Ratio

The comparison of the average earnings of women to the average earnings of men in the workforce, often used to evaluate gender wage gaps.

Long-Run Adjustment

Changes in production or operations that a firm can undertake over time to adapt to new conditions, typically involving capital investment.

Assembly-Line Plant

A manufacturing facility where products are assembled in a sequential manner along a conveyor belt or line.

Average Variable Cost (AVC)

The cost per unit produced that varies, found by dividing the total variable expenses by the amount of output generated.