Table 3-4 Assume That the Farmer and the Rancher Can Switch Between

question 19

Multiple Choice

Table 3-4
Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate.

-Refer to Table 3-4.Assume that the farmer and the rancher each has 24 labor hours available.If each person spends all his time producing the good in which he has a comparative advantage and trade takes place at a price of 1 pound of meat for 2 pounds of potatoes,then

• A) the farmer and the rancher will both gain from this trade.
• B) the farmer will gain from this trade, but the rancher will not.
• C) the rancher will gain from this trade, but the farmer will not.
• D) neither the farmer nor the rancher will gain from this trade.

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Definitions:

Less Of

A comparative term indicating a reduced quantity or degree of something.

Marginal Utility

The additional satisfaction or utility that a consumer receives from consuming an additional unit of a good or service.

Money Income

The total amount of monetary earnings or receipts accruing to an individual or household from various sources before any deductions like taxes.

Total Utility

The complete fulfillment experienced when a certain amount of products or services is consumed.