Refer to the Above Table

question 63

Multiple Choice

Refer to the above table. Assuming constant opportunity costs, which of the of the following statements is correct if the rate of exchange is 1 movie for 1 cuckoo clock.

• A) U.S. residents would be willing to export cuckoo clocks, but Swiss residents would not gain from exporting movies at this rate of exchange.
• B) Swiss residents would be willing to export movies, but U.S. residents would not gain from exporting cuckoo clocks at this rate of exchange.
• C) U.S. residents will gain from exporting movies and Swiss residents will gain from exporting cuckoo clocks at a rate of exchange.
• D) U.S. residents will gain from exporting cuckoo clocks and Swiss residents will gain from exporting movies at a rate of exchange.

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Definitions:

Different Costs

Various expenditures a business incurs, such as fixed, variable, direct, and indirect costs.

Barriers to Entry

Factors that make it difficult for new firms to enter a market, such as high start-up costs, stringent regulations, or strong incumbent firms.

Monopolist

A market participant that has exclusive control over the supply of a particular good or service, potentially allowing them to manipulate the market.

Increase Their Profits

A strategy or action that leads to a higher amount of net earnings by a business or individual.