Abby Bakes Brownies and Liam Grows Flowers

question 34

Multiple Choice

Abby bakes brownies and Liam grows flowers.In which of the following cases is it impossible for both Abby and Liam to benefit from trade?

• A)Abby does not like flowers and Liam does not like brownies.
• B)Abby is better than Liam at baking brownies and Liam is better than Abby at growing flowers.
• C)Liam is better than Abby at baking brownies and at growing flowers.
• D)Both Abby and Liam can benefit from trade in all of the above cases.

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Definitions:

Return Requirement

The expected rate of return that an investment needs to generate to be considered worthwhile.

Cash Flows

The overall totality of financial exchanges inside and outside a company, deeply affecting its ability to have cash on hand.

Under-Valued

A term used to describe a security that is trading below its perceived true market value.

Amortized Loan

A loan with scheduled periodic payments that consist of both principal and interest, typically paid monthly, until the loan is fully repaid at the end of its term.