Figure 3-10 Alice and Betty's Production Possibilities in One 8-Hour Day

question 37

Multiple Choice

Figure 3-10
Alice and Betty's Production Possibilities in one 8-hour day.
Alice's Production Possibilities Frontier
Betty's Production Possibilities Frontier
-Refer to Figure 3-10.If point A represents Alice's current production and point B represents Betty's current production,under what circumstances can both Alice and Betty benefit from specialization and trade?

• A)Alice produces more pizzas and Betty produces more lemonade.
• B)Alice produces more lemonade and Betty produces more pizzas.
• C)Both Alice and Betty produce only pizzas.
• D)There are no circumstances under which both Alice and Betty can benefit from specialization and trade.

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Definitions:

Initial Value Method

An accounting method for investments where the investment is recorded and maintained at its original cost without adjustment for changes in market value.

Common Stock

Equity ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.

Equity Method

An accounting technique used to assess the profits earned by investments in other companies, where the investment income is proportional to the ownership stake.

Common Stock

A type of equity security that represents ownership in a corporation, with holders entitled to vote on corporate matters and receive dividends.