Suppose That a Worker in Caninia Can Produce Either 2

question 56

Multiple Choice

Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in Felinia can produce either 5 blankets or 1 meal per day. Each nation has 10 workers. For many years, the two countries traded, each completely specializing according to their respective comparative advantages. Now war has broken out between them and all trade has stopped. Without trade, Caninia produces and consumes 10 blankets and 40 meals per day and Felinia produces and consumes 25 blankets and 5 meals per day. The war has caused the combined daily output of the two countries to decline by

• A)15 blankets and 35 meals.
• B)25 blankets and 40 meals.
• C)35 blankets and 45 meals.
• D)50 blankets and 80 meals.

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Definitions:

Bond B

A reference to a specific bond investment, often denoted for classification or tracking purposes.

Current Yield

The annual income (interest or dividends) divided by the current price of the security, often used in assessing bonds and other fixed-income investments.

5 ½% Bond

A bond that pays a 5.5% interest rate to its holders, typically annually or semi-annually.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, including all interest payments and the repayment of principal.