Figure 1 an Example of China-U

question 15

Multiple Choice

Figure 1. An Example of China-U.S. Trade Possibilities
-Considering Figure 1, prior to trade the production of textiles and aircraft for both China and the U.S.are 19 and 9.Which of the following represents the pre-trade situation?

• A) China has a comparative advantage in the production of textiles and the U.S. has a comparative advantage in the production of aircraft.
• B) China has a comparative advantage in the production of aircraft and the U.S. has a comparative advantage in the production of textiles.
• C) China has an absolute advantage in the production of both textiles and aircraft.
• D) The U.S. has an absolute advantage in the production of both textiles and aircraft.

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Definitions:

General Partnership

A business arrangement where two or more individuals agree to share all assets, profits, financial, and legal liabilities of a jointly-owned business.

Legal Entities

Organizations that have legal rights and obligations, including the ability to enter into contracts and own assets.

Separate Accounting Entity

A fundamental accounting principle that treats a company's financial reports as distinct from those of its owners or other businesses.

Audit

A systematic examination of books, accounts, documents, and vouchers of an organization to ascertain how far the financial statements present a true and fair view.