Computer Game Cartridges Produced in EconomyLand Sell for $50 Each

question 62

Multiple Choice

Computer game cartridges produced in EconomyLand sell for $50 each. The same cartridges made in MarketLand have a price of $100. If free trade were allowed, we would expect the prices in both countries to:

• A) converge to somewhere between $50 and $100.
• B) move to the higher price of $100.
• C) move to the lower price of $50.
• D) remain unchanged.

---

Definitions:

Plant Asset

Long-term tangible assets that are used in the production of goods and services, including machinery, buildings, and equipment.

Depreciable Cost

The total amount that can be depreciated over the life of an asset, typically the asset's cost minus its salvage value.

Salvage Value

The foreseen redemption value of an asset after its period of usability concludes.

Useful Life

The estimated time period that an asset is expected to be usable for its intended purpose.