Using the Figure Above,suppose with No Trade Liz and Joe

question 76

Multiple Choice

Using the figure above,suppose with no trade Liz and Joe each produce at point A on their respective PPFs.Then,Liz suggests that they specialize and trade.She would produces only smoothies and Joe would produce only salads.Then she would sell 10 smoothies to Joe at a price of 2.5 salads per smoothie.In this scenario,

• A) Liz gains 10 smoothies and 5 salads, and Joe gains 5 smoothies.
• B) Liz gains 5 smoothies, and Joe gains 10 smoothies.
• C) Liz gains 10 smoothies, and Joe loses 5 smoothies.
• D) Liz gains 5 smoothies and 5 salads, and Joe loses 5 salads.
• E) None of the individuals gains from trade.

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Definitions:

Chi-Square Distribution

A statistical distribution used to assess the goodness-of-fit between observed and expected frequencies.

Degrees of Freedom

The number of independent pieces of information available to estimate another parameter.

Expected Frequencies

The anticipated count of occurrences across different categories based on probability distributions in statistics.

Chi-Square Value

A statistical measure used in tests of independence and goodness of fit, indicating how expectations compare to actual observed data.