In the Following Classical-Type Table Showing the Output Per 10-Days

question 28

Multiple Choice

In the following Classical-type table showing the output per 10-days of labor input in each of the two commodities in each of the two countries,
$$\begin{array} { l l l } &\underline{ \text { Cameras }} &\underline{ \text { Wine }} \\\text { France } & 100 \text { units } & 40 \text { units } \\\text { Germany } & 150 \text { units } & 50 \text { units }\end{array}$$

• A) Germany has a comparative advantage in both goods.
• B) France has an absolute advantage in both goods.
• C) France has a comparative advantage in cameras.
• D) the pretrade price ratio in France is 1 wine = 2.5 cameras.

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Definitions:

Fixed Costs

Expenses that do not change with the amount of goods or services produced by a business.

Sunk Costs

Sunk costs refer to expenses that have already been incurred and cannot be recovered, and therefore should not affect future business decisions.

Opportunity Costs

The missed opportunity to benefit from different options when a single choice is made.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.