Suppose Aharoni and Kalinga Are the Only Two Countries in the World

question 131

Multiple Choice

Suppose Aharoni and Kalinga are the only two countries in the world and they produce computers and shoes.Aharoni has 100 workers,and Kalinga has 200 workers.The table below shows the per-day production possibilities for each country.Aharoni has:
Table 19.1:
?
$$\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Computers } \\\text { (units) }\end{array} & \begin{array} { l } \text { Shoes } \\\text { (pairs) }\end{array} \\\hline \text { Aharoni } & 600 & 300 \\\hline \text { Kalinga } & 200 & 400 \\\hline\end{array}$$

• A)an absolute advantage in computers only.
• B)an absolute advantage in shoes only.
• C)a comparative advantage in computers.
• D)a comparative advantage in shoes.
• E)neither absolute advantage nor comparative advantage in computers.

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Definitions:

Unrealised Profit

Unrealised profit refers to profits that have been generated on paper through an investment's increased value but have not yet been realized through a sale.

Inventories

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials to be consumed in the production process.

External Party

An individual or organization that is separate from the entity being referred to and not directly involved in its operations or management.

Legal Entities

Organizations, companies, or individuals that have legal rights and obligations, allowing them to enter into contracts, sue, and be sued.