Use the Following to Answer Questions

question 7

Multiple Choice

Use the following to answer questions:
Figure: Countries A and B
-(Figure: Countries A and B) Refer to the figure regarding countries A and B. If both countries fully allocate all of their labor toward the good in which they have a comparative advantage, the combined production for the two countries would be _______ units of Good X, and _______ units of Good Y.

• A) 100; 80
• B) 70; 90
• C) 40; 100
• D) 100; 100

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Definitions:

FIFO

An accounting method where the first items placed in inventory are the first sold or used.

Inventories

Quantities of goods in stock that are held by a business for the purpose of sale or production.

Retrospective Adjustment

An accounting practice where prior period financial statements are adjusted to reflect changes in accounting policies or correction of errors as if the new policy had always been applied.

Financial Statements

Reports that provide an overview of a company's financial condition, performance, and cash flows.