Suppose France Can Produce Four Phones or Three Computers with One

question 47

Multiple Choice

Suppose France can produce four phones or three computers with one unit of labor, and Sweden can produce one phone or two computers with one unit of labor. If France can trade only with Sweden, then the theory of comparative advantage suggests that:

• A) France should specialize in producing phones and import computers from Sweden.
• B) France should specialize in producing computers and import phones from Sweden.
• C) France should produce both phones and computers, and import nothing from Sweden.
• D) France should import both phones and computers from Sweden.

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Definitions:

Coupon Bond

A type of bond that pays the holder interest at fixed intervals through coupons.

Par Value

The face value of a bond or stock, representing the amount that the issuing company agrees to pay at maturity or the value on which dividend payments are calculated.

Coupon Rate

The interest rate paid by a bond issuer on its nominal value, determining the periodic interest payments to bondholders.

Yield To Maturity

The total return anticipated on a bond if held until its maturity date.