Below Is Production Possibilities Data for the Countries of Mental

question 156

Multiple Choice

Below is production possibilities data for the countries of Mental and Etheric.

-Refer to the information above to answer this question.Suppose that the two countries specialize and trade in the products in which they have a comparative advantage and establish the terms of trade at 1 unit of rice cake = 1.5 units of soya milk.If Etheric exports 30 million units of rice cakes to Mental,what will be the consumption combinations for Mental?

• A)30 million units of soya milk and 55 million units of rice cakes.
• B)45 million units of soya milk and 90 million units of rice cakes.
• C)35 million units of soya milk and 30 million units of rice cakes.
• D)90 million units of soya milk and 45 million units of rice cakes.
• E)10 million units of soya milk and 30 million units of rice cakes.

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Definitions:

Foreign Direct Investment

Investment made by a company or individual in one country in business interests in another country, in the form of establishing business operations or acquiring business assets.