This Table Shows How Much Wine and Cheese Can Be

question 107

Multiple Choice

This table shows how much wine and cheese can be produced in Spain and Portugal with one unit of equivalent resources. Initially there is no trade. Once trade opens up, transportation costs are assumed to be zero. $$\begin{array}{l}\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Wine } \\\text { (units) }\end{array} & \begin{array} { l } \text { Cheese } \\\text { (units) }\end{array} \\\hline \text { Spain } & 2 & 8 \\\hline \text { Portugal } & 2 & 3 \\\hline\end{array}\\\text { TABLE 33- } 5\end{array}$$
-Refer to Table 33- 5. The comparative advantage in wine is held by

• A) Portugal.
• B) both countries.
• C) -- insufficient information to determine the answer.
• D) neither country.
• E) Spain.

---

Definitions:

Finished Goods

Products that have completed the manufacturing process and are ready for sale.

Cost of Goods Sold

The immediate expenses linked to the creation of products that a company sells.

Accounts Payable

Liabilities owed by a business to creditors for goods and services purchased on credit.

Work in Process

Inventory that includes the cost of raw materials, labor, and manufacturing overhead for products that are in various stages of production but not yet complete.