Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of the following statements is true?
a. Both countries could gain from trade with each other.
b. Neither country could gain from trade with each other because Cornland has an absolute advantage in both goods.
c. Neither country could gain from trade with each other because neither one has a comparative advantage.
d. Oatland could gain from trade between the two countries, but Cornland definitively would lose.
c
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If oil refiners expect the government to tax away any profits created by international supply disruptions, refiners will choose to
A) carry smaller inventories of crude petroleum. B) leave the oil refining business. C) prevent the price of crude petroleum from rising. D) raise their prices to cover their added risks. E) take a higher percentage of their profits as windfalls.
What three sources of revenue finance the EU budget?
What will be an ideal response?