Suppose That a Worker in Freedonia Can Produce Either 6

question 144

Multiple Choice

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year,and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year.Each nation has 10 workers.Without trade,Freedonia produces and consumes 30 units of corn and 10 units of wheat per year.Sylvania produces and consumes 10 units of corn and 30 units of wheat.Then suppose that trade is initiated between the two countries,and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat.What maximum amounts will Freedonia now be able to consume

• A)30 units of corn and 30 units of wheat
• B)0 units of corn and 30 units of wheat
• C)60 units of corn and 30 units of wheat
• D)0 units of corn and 60 units of wheat

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Definitions:

Perpetual Inventory Method

An inventory accounting method where updates to the inventory records are made immediately following each sale or purchase.

Sales Returns and Allowances

A reduction in sales revenue that occurs when customers return goods or receive allowances for unsatisfactory goods, impacting the net sales figure.

Merchandise Inventory

Goods or products that a company holds for the primary purpose of selling them to customers.

Sales Returns & Allowances

Sales Returns & Allowances account for the reduction in sales due to products being returned or allowances provided for damaged goods.