Suppose That a Worker in Radioland Can Produce Either 4

question 103

Multiple Choice

Suppose that a worker in Radioland can produce either 4 radios or 1 television per year and a worker in Teeveeland can produce either 2 radios or 5 televisions per year.Each nation has 100 workers,and each country specializes according to the principle of comparative advantage.If Radioland trades 100 televisions to Teeveeland in exchange for 100 radios each year,then each country's maximum consumption of new radios and televisions per year will be

• A)higher than it would be in the absence of trade because of the gains from trade.
• B)the same as it would be in the absence of trade.
• C)less than it would be in the absence of trade because neither country is specializing in the product in which it has a comparative advantage.
• D)less than it would be in the absence of trade because Teeveeland has an absolute advantage in both goods and so it cannot benefit by trading with Radioland.

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Definitions:

Stock Split

A corporate action to increase the number of shares outstanding by issuing more shares to current shareholders, often to make the stock more affordable to investors.

Market Price

Market Price refers to the current price at which an asset or service can be bought or sold in a marketplace.

Dividend Per Share

The total dividends declared by a company for each share of common stock owned.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenue.