Scenario 34

question 6

Multiple Choice

Scenario 34.2 Suppose labor productivity differences are the only determinants of comparative advantage, and both Egypt and produce only corn and cocoa.In Egypt, 10 bushels of corn or 15 pounds of cocoa can be produced in a day.In Ghana, one day of labor can be used to produce either 2 bushels of corn or 8 pounds of cocoa.
Refer to Scenario 34.2.Egypt will be willing to trade corn for cocoa if in the international market 1 bushel of corn can be exchanged for:

• A)more than 1 pound of cocoa.
• B)less than 1 pound of cocoa.
• C)more than 1.5 pounds of cocoa.
• D)less than two-third of a pound of cocoa.
• E)more than half a pound of cocoa.

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Definitions:

Work

A physical or mental activity that accomplishes or produces something, either goods or services.

Globalization

The growth and spread of investment, trade, production, communication, and new technology around the world.

Spread of Investment

The diversification of investments across different sectors, assets, or geographies to reduce risk and achieve a more stable return.

Production

The process of creating goods and services through the combination of labor, materials, and technology.