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

question 1

Multiple Choice

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

$\begin{array}{|l|c|c|l|l|c|c|}\hline{\text { Output per worker in Gamma }} & &&&{\text { Output per worker in Sigma }} \\\hline & \mathrm{A} & \mathrm{B} & & & \mathrm{A} & \mathrm{B} \\\hline \text { Tea } & 120 & 0 & & \text { Tea } & 40 & 0 \\\hline \text { Pots } & 0 & 120 & & \text { Pots } & 0 & 120 \\\hline\end{array}$
-Assume that before specialization and trade,each nation devoted half of its workforce to each product.If these two nations fully specialize in accordance with comparative advantage,the total gains from specialization would be:

• A)200 units of tea and 200 pots
• B)400 pots
• C)400 units of tea
• D)400 units of tea and 400 pots
• E)600 units of tea and 600 pots

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Definitions:

First-In, First-Out

A method for managing inventories and accounting, assuming that the earliest goods purchased are the first to be sold or used.

Inventory Costing

Methods used to value and account for inventory, including Specific Identification, FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and Weighted Average.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the costs incurred to convert raw materials into finished products.

First-In, First-Out

A rephrased definition: An accounting method used to value inventory and calculate cost of goods sold, assuming the earliest goods purchased are the first to be sold.