The Following Table Indicates the Production Possibilities of Food and Clothing

question 116

Multiple Choice

The following table indicates the production possibilities of food and clothing per worker day in the United States and Japan.
Which of the following is true?

• A) Since U.S. workers produce more of both food and clothing than Japanese workers, no gains from trade are possible.
• B) Mutual gains from trade could be realized if the United States specialized in food production and Japan in clothing production.
• C) The Japanese are the low-cost producers of both food and clothing.
• D) Joint output would be maximized if the United States specialized in producing clothing and Japan in producing food.

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Definitions:

Cash Flow

The total amount of money being transferred into and out of a business, especially considered important for maintaining liquidity.

Cost Of Capital

The total cost of funds used for financing a business, including debt and equity.

NPV

Net Present Value, a calculation used to determine the value of a project or investment by discounting future cash flows to the present.

Cash Flow

Total funds inflow and outflow within a business and its effect on liquid assets.