Table 3-16 Summary of the Gains from Trade

question 168

Multiple Choice

Table 3-16 Summary of the Gains from Trade

-Refer to Table 3-16.The values in the table represent the amounts of lemonade and pizzas that Alice and Betty can produce in one week without and with specialization and trade.What are Alice and Betty's gains from specialization and trade?

• A) Alice gains 7 pitchers of lemonade and 10 pizzas, while Betty gains 13 pitchers of lemonade and 10 pizzas.
• B) Alice gains 200 pitchers of lemonade and 100 pizzas, while Betty gains 180 pitchers of lemonade and 180 pizzas.
• C) Alice gains 207 pitchers of lemonade and 110 pizzas, while Betty gains 193 pitchers of lemonade and 190 pizzas.
• D) Alice gains 400 pitchers of lemonade and 0 pizzas, while Betty gains 0 pitchers of lemonade and 300 pizzas.

---

Definitions:

Gross Profit on Sales

The difference between sales revenue and the cost of goods sold before deducting overheads, taxes, or interest.

FIFO Retail Inventory Method

An accounting method for valuing inventory where the first items purchased are the first ones to be sold.

Freight-in Charges

The costs associated with transporting inventory to the buyer's location, often included in the cost of goods purchased.

Ending Inventory

Ending inventory is the total value of goods available for sale at the end of an accounting period.