Suppose That a Worker in Country a Can Make Either

question 19

Multiple Choice

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.Suppose Country A specializes in bananas,and Country B specializes in tomatoes.The limits to the terms of trade that Country A would find acceptable are:

• A)Country A will give no more than 5 bananas for each tomato.
• B)Country A will give no less than 5 bananas for each tomato.
• C)Country A will give no more than 1 tomato for every 5 bananas.
• D)Country A will give no less than 1 tomato for every 5 bananas.

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Definitions:

Net Operating Income

The net profit of a business is calculated by deducting operating expenses from the gross profit and before accounting for interest and taxes.

Sales Volume

The number of units sold within a reporting period, used as a measure of business activity.

Margin of Safety

The difference between actual sales and the break-even point, indicating how much sales can drop before a company incurs a loss.

Break-even Sales

The instance at which all costs are balanced by all revenues, resulting in neither gain nor loss.