In the Table Below Both Countries Produce at the Bold

question 24

Multiple Choice

In the table below both countries produce at the bold levels of output without trade.Assume the US and UK initiate trade and begin to completely specialize in the commodity in which they have a comparative advantage.Identify the gains from trade if the US trades 50 units of rice to the UK for 50 units of pudding.
Production Possibility Schedule for Rice and Pudding in the United States and the United Kingdom
$\begin{array}{|cc|cc|}\hline \text { United States } &&\text {United Kingdom } \\\hline \text {Rice} & \text {Pudding} &\text { Rice }& \text {Pudding} \\\hline 140 & 0 & 35 & 0 \\\hline 120 & 10 & 30 & 10 \\\hline 100 & 20 & 25 & 20 \\\hline 80 & 30 & 20 & 60 \\\hline 60 & 40 & 15 & 80 \\\hline 40 & 50 & 10 & 100 \\\hline 20 & 60 & 5 & 120 \\\hline 0 & 70 & 0 & 140 \\\hline\end{array}$

• A)US: 10 units of pudding,20 units of rice
• B)US: 30 units of pudding,30 units of rice
• C)UK: 10 units of pudding,20 units of rice
• D)UK: 30 units of pudding,30 units of rice

---

Definitions:

Operating Activities

Activities that relate directly to the primary operations of the company, such as manufacturing, distribution, and marketing.

Worn-Out Machinery

Worn-Out Machinery refers to equipment that has reached the end of its useful life due to wear and tear, aging, or obsolescence.

Expanding Current Operations

The process of increasing the scale or scope of a company's business activities.

Accrued Interest

The accumulation of interest on a loan or bond since the last payment date but not yet paid out to the lender.