The Following Data Outline Production Choices (A or B) in Two

question 61

Multiple Choice

The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10.

$$\begin{array} { | l | c | c | c | c | c | c | } \hline { \text { Output per worker in Landia } } & & && { \text { Output per worker in Scandia } } \\\hline & \mathrm { A } & \mathrm { B } & & & \mathrm { A } & \mathrm { B } \\\hline \text { Fish } & 8 & 0 & & \text { Fish } & 16 & 0 \\\hline \text { Chips } & 0 & 40 & & \text { Chips } & 0 & 48 \\\hline\end{array}$$

-Assume that before specialization and trade,each nation devoted half of its workforce to each product.If these two nations now fully specialize in accordance with comparative advantage,the total gains from specialization would be:

• A)8 chips
• B)50 chips and 24 fish
• C)32 fish
• D)8 chips and 32 fish
• E)24 chips and 32 fish

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Definitions:

Countercyclical Stock

Stocks that tend to move inversely to the economic cycle; they perform well when the economy is in a downturn.

Portfolio Expected Return

The portfolio expected return is the weighted average of the expected returns of the assets within a portfolio.

Standard Deviation

A measure of the dispersion or variability around the mean of a set of data, used in finance to quantify the risk of investment returns.