Exhibit 28-1 Alpha Can Produce Either 18 Tons of Oranges

question 8

Multiple Choice

Exhibit 28-1 Alpha can produce either 18 tons of oranges or 9 tons of apples in a year,while Omega can produce either 16 tons of oranges or 4 tons of apples.
Refer to Exhibit 28-1.If the terms of trade are established as 1 ton of apples for 4 tons of oranges:

• A) there are no incentives for Omega to engage in international specialization and trade with Alpha.
• B) it is in the interest of Omega to grow oranges and trade for apples.
• C) it is in the interest of both countries to specialize and trade with one another.
• D) there are no incentives for Alpha or Omega to specialize and trade with one another.

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Definitions:

Debits

These are entries on the left side of accounting records, used to increase asset or expense accounts or decrease liabilities, equity, or revenue accounts.

Credits

Accounting entries that increase liabilities or equity or decrease an asset or expense.

Common Shares

Shares of stock, which signify part ownership in a corporation, granting the holder the right to vote on corporate matters and to receive a portion of the company’s earnings via dividends.