Production possibilities for two producers and merchants, Eric and Stan, are shown in the table below. Suppose both Eric and Stan are initially independent producers. Eric is producing 240 loaves of bread and 30 logs of wood. Stan is producing 180 logs of wood and 45 loaves of bread. Eric's Production Possibilities (monthly) Bread (loaves) Stan's Production Possibilities (monthly) Bread (loaves) Wood (logs) Wood (logs) 300 225 240 30 180 45 180 60 135 90 120 90 90 135 60 120 45 180 150 225 Eric and Stan are considering an arrangement of specialization and trade. If they specialize according to comparative advantage and agree on a trade of 45 loaves of bread for 30 logs of wood, then O A. Stan will produce 225 logs of wood, keep 135, and trade 90 to Eric in exchange for 120 loaves of bread. B. Eric will have the same number of logs of wood as he did initially, but he will have more loaves of bread. C. Stan will have the same number of logs of wood, but he will have more loaves of bread. D. Eric will produce 300 loaves of bread, keep 150, and trade 150 to Stan in exchange for 75 logs of wood. O O O O

Production possibilities for two producers and merchants, Eric and Stan, are shown in the table below. Suppose both Eric and Stan are initially independent producers. Eric is producing 240 loaves of bread and 30 logs of wood. Stan is producing 180 logs of wood and 45 loaves of bread. Eric's Production Possibilities (monthly) Bread (loaves) Stan's Production Possibilities (monthly) Bread (loaves) Wood (logs) Wood (logs) 300 225 240 30 180 45 180 60 135 90 120 90 90 135 60 120 45 180 150 225 Eric and Stan are considering an arrangement of specialization and trade. If they specialize according to comparative advantage and agree on a trade of 45 loaves of bread for 30 logs of wood, then O A. Stan will produce 225 logs of wood, keep 135, and trade 90 to Eric in exchange for 120 loaves of bread. B. Eric will have the same number of logs of wood as he did initially, but he will have more loaves of bread. C. Stan will have the same number of logs of wood, but he will have more loaves of bread. D. Eric will produce 300 loaves of bread, keep 150, and trade 150 to Stan in exchange for 75 logs of wood. O O O O

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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