Countries a and B Currently Consume 400 Units of Food

question 34

Multiple Choice

Countries A and B currently consume 400 units of food and 400 units of textiles each and currently do not trade with one another.The citizens of country A have to give up one unit of food to gain two units of textiles,while the citizens of country B have to give up one unit of textiles to gain two units of food.Their production possibilities curves are shown. Under the theory of comparative advantage

• A)The citizens of country A should make food and trade with the citizens of country B for textiles.
• B)The citizens of country A should make textiles and trade with the citizens of country B for food.
• C)There are no gains from trade in this example.
• D)A is twice as good as B at making food and B is twice as good as A at making textiles.

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Definitions:

Due Dates

Specific dates by which obligations, such as bill payments or assignments, must be fulfilled or submitted.

Trade Credit

It is a type of commercial financing in which a buyer is allowed to purchase goods or services and pay the supplier at a later scheduled date.

Fundamental Benefit

A primary or essential advantage that is intrinsic to a product, service, or activity.

ACP

Average Collection Period (ACP) is a financial metric that measures the average number of days it takes for a company to collect payments from its customers after a sale has been made.