Answer:
Option (a) is correct.
Explanation:
Alland can produce 32 units of food per person per year or 16 units of clothing per person per year:
Opportunity cost of producing a unit of food = (16 ÷ 32)
= 0.5 units of clothing
Opportunity cost of producing a unit of clothing = (32 ÷ 16)
= 2 units of food
Georgeland can produce 36 units of food per year or 18 units of clothing:
Opportunity cost of producing a unit of food = (18 ÷ 36)
= 0.5 units of clothing
Opportunity cost of producing a unit of clothing = (36 ÷ 18)
= 2 units of food
Therefore, the Georgeland has a absolute advantage in producing both the goods because it can produce more quantity of both the goods with the same resources as Alland. But the Georgeland has not having comparative advantage in producing either of the goods.
Answer and Explanation:
The consequences of given transactions are as follows
a. Revenues rise by $3.2 million as the firm received an order
b. Earnings rise by $1.5 million as the firm received an order and it filled by an orders i,e ($3.2 - $1.7)
c. Receivables rise by $1.80 million as it determines the remaining balance which ultimately increased the receivable balance
d. Inventory declined by $1.7 million as the order is filled which ultimately declines the stock
e. The cash would rise by $1.4 million
= Earnings - receivable + inventory
= $1.5 million - $1.80 million + $1.7 million
= $1.4 million
