Fact Pattern 18-A Refer to the Following Data

question 82

Multiple Choice

Fact Pattern 18-A
Refer to the following data:
Alpha can produce either 18 tons of oranges or 9 tons of apples in a year, while Omega can produce either 16 tons of oranges or 4 tons of apples.
-Refer to Fact Pattern 18-A.Which of the following statements is true?

• A)Alpha should export to Omega, but Omega should not export to Alpha.
• B)Since Alpha has an absolute advantage in both goods, no mutual gains from trade are possible.
• C)If Alpha specializes in growing oranges and Omega specializes in growing apples, they could both gain by specialization and trade.
• D)If Alpha specializes in growing apples and Omega specializes in growing oranges, they could both gain by specialization and trade.
• E)Since Alpha has a comparative advantage in producing both goods, no mutual gains from trade are possible.

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Definitions:

Initial Cost

The initial expenditure involved in purchasing an asset or starting a project.

Exercise Price

The established price at which an option holder may execute the purchase (in a call option scenario) or sale (when dealing with a put option) of the related security or commodity.

European Call Option Delta

A measurement of the sensitivity of a European call option's price to a change in the price of the underlying asset.

European Put Option Delta

European Put Option Delta quantifies the sensitivity of the price of a European put option to changes in the price of the underlying asset, representing the price movement correlation.