Wages Are Higher in Country X Than in Country Y

question 17

Multiple Choice

Wages are higher in Country X than in Country Y.If the countries decide to trade,then who will benefit?

• A) Neither country can benefit unless one knows the product that is traded.
• B) Both countries can benefit regardless of the products traded.
• C) Only the country that can produce the product more efficiently will benefit.
• D) Only the country that can produce the product at a lower opportunity cost will benefit.
• E) Both countries will benefit,but only if a trade agreement for specific products is made by their respective governments.

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Definitions:

Fair Market Value

is an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would likely pay to a knowledgeable, willing, and unpressured seller in the market.

Identifiable Assets

Assets that can be separately identified and valued in a business combination, distinguishable from goodwill.

FIFO System

First-In, First-Out method, an inventory valuation strategy where the oldest items are sold or used first.

Cost Method

An accounting approach used for recording investments, where the investment is recorded at cost and adjusted only for dividends received and not for changes in market value.