If Argentina Has an Absolute Advantage in the Production of Wheat

question 19

Multiple Choice

If Argentina has an absolute advantage in the production of wheat and Chile has an absolute advantage in the production of copper, then:

• A) neither country has anything to gain from specialisation and trade
• B) it is reasonable to expect that specialisation will benefit both countries, but that trade will not
• C) it is reasonable to expect that trade will benefit both countries, but that specialisation will not
• D) it is reasonable to expect that specialisation and trade will benefit both countries

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Definitions:

Impairment

The reduction in the recoverable value of a fixed asset or goodwill below its book value on the balance sheet, often leading to an expense in the income statement.

Retained Earnings

Accumulated net income that has been retained by a company rather than distributed to its owners as dividends.

Shareholders

Individuals or entities that own shares in a corporation, giving them ownership interest in the company.

Cost Method

An accounting method used to record investments, where the investment is recorded at its acquisition cost without adjusting for changes in market value.