Use the Following to Answer Questions

question 37

Essay

Use the following to answer questions :
-(Table: Production Possibilities in the United States and Colombia) Look at the table Production Possibilities in the United States and Colombia. Suppose that each nation specializes in producing the good in which it has the comparative advantage, and the two nations agree to trade. A year later we observe Colombia consuming 20 computers and 20 tons of coffee, and we observe the United States consuming 80 computers and 5 tons of coffee. How many computers does the United States export? How many tons of coffee does the United States import? If the world price of a computer is $500, what is the world price of a ton of coffee? Justify your answers.

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Definitions:

Acquisition Differential

Represents the excess amount over the fair market value of net assets that is paid by a company to acquire another company.

Capital Assets

Long-term assets acquired for operation and not intended for sale, including property, plant, and equipment.

Goodwill Impairment

An accounting charge that occurs when the market value of goodwill is less than its recorded value on the balance sheet.

Plant and Equipment

Long-term tangible assets used in the operations of a business to produce goods and services, such as machinery, buildings, and vehicles.