CFA Practice Question

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CFA Practice Question

Units of output per work day:

What changes in the total production of food and clothing will take place if Japan moves three workers from clothing production to food production and the U.S. moves two workers from food production to clothing production?

A. Total food production increases by 1 unit and total clothing production increases by 6 units.
B. Total food production increases by 3 units and total clothing production increases by 12 units.
C. Total food production decreases by 8 units and total clothing production increases by 9 units.
Correct Answer: A

Food production in the U.S. falls by 8 units and in Japan it increases by 9 units. The increase in total food production is 1 unit. Clothing production in the U.S. increases by 24 units and in Japan it falls by 18 units. The increase in total clothing production is 6 units.

User Contributed Comments 11

User Comment
danlan For U.S.A, Food -4*2, Clothing 12*2
For Japan, Food 3*3, Clothing -6*3
Food -4*2+3*3=1, Clothing 12*2-6*3=6
sevaa1 Rationale for this problem:
It asks per units of output per work day. Read from the table: that's how much one worker produces per day. I.e. One worker produces 3 units of food per day for Japan. So, if we transfer 3 workers to food, they will produce 3*3 = 9 units more altogether. Apply the same logic to all the transactions and take the difference. - you'll get the right answer.
Smiley225 Good1 sevaa1.
KarenMaciel opportunity cost of prodn
shann680 Not a very clear question. Output per work day does not give the same meaning as output per worker per day.
something Good answer, but not a very clear question.
gclafort I did it like this

Food: +9 (3x3) -8 (-2x4) = 1
Clothing: -18 (-3x6)+ 24 (2x12) = 9
chesschh The graph should say that the output is per worker per day. With this, the answer should be simple...
CLOTHING: US increases by 24 units, Japan decreases by 18 units. Resulting in a total 6 units gain.
FOOD: US decreases by 8 units; Japan increases by 9 units. Resulting in a total 1 unit increase
Inaganti6 Work vs Worker.

critical error in question statement. This is not the kind of question quality I expect for $100. Seriously, we're studying for the CFA here and I didn't encounter any amateur mistakes like this even when I was in high school studying for the SAT.
choas69 i found a pattern in this example and another example please confirm,

the total output expansion is the difference between the two countries in specific market.
4-3 = 1 increase in food < jpn has comparative adv >
12-6=6 increase in cloth < US has comparative adv >

the same pattern was in my text book.
khalifa92 useless question
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