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trapecia [35]
3 years ago
9

Suppose that without specialization, Iran produces 4 barrels of oil and 6 bottles of olive oil, and Iraq produces 4 barrels of o

il and 4 bottles of olive oil (in millions per day). Are the countries better off or worse off with specialization and trade? Suppose that the terms of trade with specialization are 4 barrels of oil for 4.3 bottles of olive oil, and that 4 barrels of oil are indeed traded for 4.3 bottles of olive oil. With specialization and trade, how many additional barrels of olive oil can Iran consume?
Business
1 answer:
Elza [17]3 years ago
6 0

Answer:

With specialization Iran will be able to consume 1.7 bottles of olive oil.

Explanation:

Iran produces 4 barrels of oil and 6 bottles of olive oil.

Iraq produces 4 barrels of oil and 4 bottles of olive oil.

The opportunity cost of producing a barrel of oil for Iran

= \frac{6}{4}

= 1.5

The opportunity cost of producing a barrel of oil for Iraq

= \frac{4}{4}

= 1

Iraq has a lower opportunity cost for producing oil so we can say it has a comparative advantage in producing oil.

The opportunity cost of producing a barrel of olive oil for Iran

= \frac{4}{6}

= 0.66

The opportunity cost of producing a barrel of olive oil for Iraq

= \frac{4}{4}

= 1

Iran has a lower opportunity cost for producing olive oil so we can say it has a comparative advantage in producing it.

The terms of trade with specialization are 4 barrels of oil for 4.3 bottles of olive oil, and that 4 barrels of oil are indeed traded for 4.3 bottles of olive oil.

Without trade, Iran is consuming 4 barrels of oil and 6 bottles of olive oil.

With specialization, Iran will be able to consume

= 6 - 4.3

= 1.7 bottles of olive oil

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Answer:

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Explanation:

The multiple-step income statement refers to an income statement that displays gross profit obtained as sales revenue minus cost of goods sold, and also shows an organization's operating revenues and operating expenses separately from its nonoperating revenues or gains and expenses or losses.

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multiple-step income statement

For the Year Ended December 31, 2021

<u>Details                                                      $                             $             </u>

Sales Revenue                                                               5,400,000

Cost of goods sold                                                    <u>   (3,950,000)   </u>

Gross profit                                                                     1,450,000

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Selling expense                                 (350,000)

General and admin expense          <u>   (250,000)   </u>

Total operating expenses                                            <u>  (600,000)  </u>

Operating income                                                            850,000

<u>Interest revenue (expense):</u>

Interest revenue                                     37,500

Interest expense                                 <u>  (20,000) </u>

Total Interest revenue (expense)                                      17,500

<u>Other compreh. income (loss):</u>

Loss on sale of investments               (10,000)

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Total other compreh. income (loss)                             <u>   100,000  </u>

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Income taxes (w.1)                                                        <u>   (241,875)   </u>

Net income                                                                   <u>   725,625    </u>

Earnings per share (w.2)                                                      7.26

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w.2: Earnings per share = Net income / Number of shares of stock outstanding throughout the year = $725,625 / 100,000 = $7.26

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