In one day, Dahyun can produce 20 cakes or 40 brownies, and Sana can produce 25 cakes or 125 brownies. Suppose Dahyun and Sana each specialize in producing the good in which they have a comparative advantage. Select the statement that is TRUE for the following terms of trade: trade 1 cake for 7 brownies a Dahyun loses but Sana gains b Dahyun gains but Sana loses c Dahyun gains but Sana is neither better nor worse off (i.e. she is indifferent) d Both Dahyun and Sana are better off
In one day, Dahyun can produce 20 cakes or 40 brownies, and Sana can produce 25 cakes or 125 brownies. Suppose Dahyun and Sana each specialize in producing the good in which they have a comparative advantage. Select the statement that is TRUE for the following terms of trade: trade 1 cake for 7 brownies a Dahyun loses but Sana gains b Dahyun gains but Sana loses c Dahyun gains but Sana is neither better nor worse off (i.e. she is indifferent) d Both Dahyun and Sana are better off
Chapter2: Productions Possibilities, Opportunity Costs, And Economic Growth
Section: Chapter Questions
Problem 8SQ
Question
In one day, Dahyun can produce 20 cakes or 40 brownies, and Sana can produce 25 cakes or 125 brownies. Suppose Dahyun and Sana each specialize in producing the good in which they have a
Select the statement that is TRUE for the following terms of trade: trade 1 cake for 7 brownies
a
Dahyun loses but Sana gains
b
Dahyun gains but Sana loses
c
Dahyun gains but Sana is neither better nor worse off (i.e. she is indifferent)
d
Both Dahyun and Sana are better off
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