When Opportunity Costs Are Identical Between Two Countries for All

question 115

Multiple Choice

When opportunity costs are identical between two countries for all goods,

• A)there can be no gains from trade unless there are economies of scale in some of the products.
• B)international trade will be advantageous only to the country that has an absolute advantage in the production of some commodity.
• C)there will be gains from trade for both countries if one country has an absolute advantage in the production of some commodity.
• D)absolute advantages will determine the gains from trade.
• E)there will be absolute advantages from trade but no comparative advantages from trade.

Explain the concept of a risk-free asset and its role in portfolio construction.

Demonstrate the ability to construct a portfolio that maximizes expected utility.

Understand the relationship between mean return, variance, and the shape of indifference curves for risk-averse investors.

Analyze the effect of correlation between asset returns on portfolio variance.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, indicating how spread out the values are around the mean.

Sales Receipts

Documents that provide proof of a transaction between a buyer and a seller.

Geometric Mean

The geometric mean is a measure of central tendency that is calculated by taking the nth root of the product of n numbers, often used for rates and ratios.

Growth Rate

The rate at which a company's sales, revenue, or other important metrics increase over time.