Refer to the above table. Assuming constant opportunity costs, which of the of the following statements is correct if the rate of exchange is 1 movie for 1 cuckoo clock.
A) U.S. residents would be willing to export cuckoo clocks, but Swiss residents would not gain from exporting movies at this rate of exchange.
B) Swiss residents would be willing to export movies, but U.S. residents would not gain from exporting cuckoo clocks at this rate of exchange.
C) U.S. residents will gain from exporting movies and Swiss residents will gain from exporting cuckoo clocks at a rate of exchange.
D) U.S. residents will gain from exporting cuckoo clocks and Swiss residents will gain from exporting movies at a rate of exchange.

Question

Quizplus · Accepted Answer

At a rate of exchange of 1 movie for 1 cuckoo clock, U.S. residents can produce a movie with the same resources that it takes Swiss residents to produce a cuckoo clock. Therefore, U.S. residents will gain from exporting movies and Swiss residents will gain from exporting cuckoo clocks.

Refer to the Above Table