Agnes Can Produce Either 1 Unit of X or 1

question 18

Multiple Choice

Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour.

• A) Agnes has a comparative advantage in the production of Y.
• B) Brenda has a comparative advantage in the production of X.
• C) Brenda cannot gain from trade.
• D) Brenda has an absolute advantage over Agnes.

Understand the calculation and business implications of the acid-test ratio.

Calculate the acid-test ratio based on given financial information.

Understand the function and calculation of the gross margin ratio.

Differentiate between the acid-test ratio and current ratio.

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Definitions:

Arbitrageurs

Traders who seek to profit from price discrepancies of the same asset in different markets, buying low in one market and selling high in another.

Speculator

Someone who buys or sells foreign exchange in hopes of profiting from fluctuations in the exchange rate over time.

Exchange Rate

How much one currency is worth in terms of crossing over to another currency.

Mexican Demand Curve

A graphical representation showing the quantity of goods that consumers in Mexico are willing and able to purchase at various prices.