Mae Refiners, Inc

question 116

Multiple Choice

Mae Refiners, Inc., processes sugar cane that it purchases from farmers. Sugar cane is processed in batches. A batch of sugar cane costs $60 to buy from farmers and $13 to crush in the company's plant. Two intermediate products, cane fiber and cane juice, emerge from the crushing process. The cane fiber can be sold as is for $29 or processed further for $13 to make the end product industrial fiber that is sold for $61. The cane juice can be sold as is for $40 or processed further for $28 to make the end product molasses that is sold for $67.
-Which of the intermediate products should be processed further?

• A) Cane fiber should be processed into industrial fiber; Cane juice should be processed into molasses.
• B) Cane fiber should be processed into industrial fiber; Cane juice should NOT be processed into molasses.
• C) Cane fiber should NOT be processed into industrial fiber; Cane juice should NOT be processed into molasses.
• D) Cane fiber should NOT be processed into industrial fiber; Cane juice should be processed into molasses.

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Definitions:

Net Exports

The value of a country's total exports minus its total imports. It is a measure used to calculate a country's aggregate expenditures.

Comparative Advantage

The ability of an individual or economy to produce goods or services at a lower opportunity cost than competitors, leading to more efficient trade and production.

Microwave Oven

An electric oven that uses microwaves to heat or cook food by inducing polar molecules in the food to rotate and produce thermal energy.

Balance of Trade Surplus

A condition where a country's exports exceed its imports, resulting in a positive balance of trade.