-Agnes Can Produce Either 1 Unit of X or 1

question 315

Multiple Choice

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. There can be gains from exchange

• A) if Agnes specializes in the production of X and Brenda specializes in the production of Y.
• B) if Agnes specializes in the production of Y and Brenda specializes in the production of X.
• C) only if Agnes becomes faster at producing X.
• D) only if Brenda becomes faster at producing X or Y.

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Definitions:

Earnings Per Share

A financial ratio that calculates the portion of a company’s profit allocated to each outstanding share of common stock, serving as an indicator of a company's profitability.

Market Value

The present cost at which a good or service is available for purchase or sale in the market.

Price-earnings Ratio

A valuation metric for assessing a company's current share price relative to its per-share earnings.

Stock Market

A public market for the trading of company stock and derivatives at agreed prices.