Tom Takes 20 Minutes to Cook an Egg and 5

question 440

Multiple Choice

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Both individuals will be better off if

• A) Tom trades sandwiches in exchange for eggs.
• B) Jerry trades sandwiches in exchange for eggs.
• C) they trade, no matter who trades sandwiches and who eggs.
• D) they don't trade.

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Definitions:

Balance on Capital Account

A national accounting measure that records all transactions for foreign investments and loans going in and out of a country.

Net Transfers

The net amount of money, goods, or services being transferred from one entity to another, after accounting for inflows and outflows.

Balance of Capital

The net flow of capital, such as money and assets, into or out of a country, reflecting all financial transactions.

Financial Account

A component of a country’s balance of payments that records transactions of international investments, both private and public.