Refer to the Above Table

question 63

Multiple Choice

Refer to the above table. Assuming constant opportunity costs, which of the of the following statements is correct if the rate of exchange is 1 movie for 1 cuckoo clock.

• A) U.S. residents would be willing to export cuckoo clocks, but Swiss residents would not gain from exporting movies at this rate of exchange.
• B) Swiss residents would be willing to export movies, but U.S. residents would not gain from exporting cuckoo clocks at this rate of exchange.
• C) U.S. residents will gain from exporting movies and Swiss residents will gain from exporting cuckoo clocks at a rate of exchange.
• D) U.S. residents will gain from exporting cuckoo clocks and Swiss residents will gain from exporting movies at a rate of exchange.

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Definitions:

Injunction

A court order compelling a party to do or to refrain from doing a specified act.

Liquidated Damages

A pre-determined amount of money agreed upon in a contract, paid as compensation for failure to perform certain obligations by the stipulated deadline.

Earthquake

A sudden and violent shaking of the ground, sometimes causing great destruction, as a result of movements within the earth's crust or volcanic action.

Prohibitively Expensive

Costs that are so high they discourage or prevent an individual or entity from purchasing a service or product or undertaking an action.