Use the Table Below to Answer the Following Question

question 151

Multiple Choice

Use the table below to answer the following question. The table outlines the production possibilities for two hypothetical countries.
Which of the following statements is true?

• A) Redland has a comparative advantage in producing oats.
• B) Redland enjoys a comparative advantage in producing both products and could not gain from exchange.
• C) Redland should specialize in producing mutton and should trade for oats.
• D) In this example, Blueland has nothing to gain through trade with Redland.

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Definitions:

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the company's profits and a right to vote on shareholder matters.

Treasury Stock

Treasury stock consists of shares that were issued and later reacquired by the company. These shares do not pay dividends and do not have voting rights.

Par Common Stock

The nominal or face value of a share of common stock as stated in the corporate charter, which has no direct relation to the market value.

Fair Market Price

This term refers to the price at which an asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.