Assume That Blade Runner Specializes in Producing In-Line Skates and Hang

question 282

Multiple Choice

Assume that Blade Runner specializes in producing in-line skates and Hang Ten specializes in producing surfboards. After trade Blade Runner exports 800 pairs of in-line skates and imports 200 surfboards. The terms of trade

• A) are 1:4 in-line skates to surfboards.
• B) are 4:1 in-line skates to surfboards.
• C) are 1/4:1 in-line skates to surfboards.
• D) cannot be determined from this information.

---

Definitions:

Physical Capital

Consists of tangible, man-made objects that a business uses to produce goods or services, such as buildings, machinery, and equipment.

Short Run

A period in economics where at least one factor of production is fixed, limiting the ability of the economy or firm to adjust to changes in demand or supply.

Productive

Relating to or involving the creation of goods or services that satisfy human wants; the efficiency and effectiveness in producing outputs from inputs.

Constant Returns To Scale

A condition where increasing all inputs by any proportion results in output increasing by that same proportion, indicating that size does not affect productivity.