Refer to the Information Provided in Figure 20

question 177

Multiple Choice

Refer to the information provided in Figure 20.1 below to answer the question(s) that follow. Figure 20.1
-Refer to Figure 20.1. Which of the following statements is true?

• A) Only Canada can benefit from trade because the United States has an absolute advantage in the production of both soybeans and alfalfa.
• B) Trade will benefit both countries because the United States has a comparative advantage in the production of soybeans and Canada has a comparative advantage in the production of alfalfa.
• C) Trade will benefit both countries because the United States has a comparative advantage in the production of alfalfa and Canada has a comparative advantage in the production of soybeans.
• D) Trade will benefit neither country because the United States has an absolute advantage in the production of both soybeans and alfalfa, but Canada has a comparative advantage in the production of both soybeans and alfalfa.

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Definitions:

Weighted-Average Method

A cost accounting technique that assigns the same average cost to both ending inventory and the cost of goods sold.

Process Costing System

An accounting system used to calculate the cost of a product at various stages of production, commonly used in industries that produce homogeneous goods.

First Processing Department

The initial stage of the manufacturing process where raw materials start to be transformed into a product.

Conversion Costs

Conversion Costs are the combined costs of labor and overhead required to transform raw materials into finished products.