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

question 36

Multiple Choice

The following data outline production choices (A or B) in two nations, Gamma and Sigma. Each nation has a workforce of 10.

$\begin{array}{|l|c|c|l|l|c|c|}\hline{\text { Output per worker in Gamma }} & &&&{\text { Output per worker in Sigma }} \\\hline & \mathrm{A} & \mathrm{B} & & & \mathrm{A} & \mathrm{B} \\\hline \text { Tea } & 120 & 0 & & \text { Tea } & 40 & 0 \\\hline \text { Pots } & 0 & 120 & & \text { Pots } & 0 & 120 \\\hline\end{array}$
-What are the limits of the terms of trade between Gamma and Sigma?

• A)1 unit of tea = 1 pot to 3 units of tea = 1 pot
• B)1 unit of tea = 3 pots to 1 unit of tea = 6 pots
• C)1 unit of tea = 1 pot to 1 unit of tea = 3 pots
• D)6 units of tea = 1 pot to 1 unit of tea = 1 pot
• E)6 units of tea = 1 pot to 6 pots = 1 unit of tea

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Definitions:

Perpetual Inventory System

A method of inventory management where updates are made continuously as transactions occur, providing real-time inventory levels.

Selling Price

The price at which goods or services are offered for sale to customers.

Cost

The value of the expenses incurred in the production or acquisition of a good or service, including materials, labor, and overheads.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in net income or loss.