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

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Definitions:

Electronic Funds Transfer

The digital transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems.

Accounts Payable

The amounts a company owes because it purchased goods or services on credit from a supplier or vendor.

Internal Control

A process designed by an organization's management and personnel to provide reasonable assurance regarding the achievement of effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations.

Reasonable Assurance

A concept in auditing that suggests although not absolute, there is a high level of confidence in the financial statements accuracy.