Vintland and Moonited Republic Produce Wine and Cheese

question 16

Multiple Choice

Vintland and Moonited Republic produce wine and cheese. The opportunity cost for the production of a bottle of wine in Vintland is 2 pounds of cheese, and in the Moonited Republic is 2.5 pounds of cheese. Based on this information, it can be concluded that:

• A)trade between the two countries based on comparative advantage is not possible.
• B)Vintland has a comparative advantage in the production of wine.
• C)Vintland has a comparative advantage in the production of cheese and Moonited has a comparative advantage in the production of wine.
• D)Vintland has an absolute disadvantage in the production of both goods.

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Definitions:

Payment Terms

The terms that dictate when a seller will finalize a transaction, usually detailing the timeframe a buyer is granted to settle the owed amount.

Balance

The amount of money currently in an account or the difference between the total debits and credits recorded.

Overhead Costs

Expenses related to the day-to-day running of a business that are not directly linked to a specific product or service.

Operating Profit

Profit earned from a firm's core business operations, excluding deductions of interest and taxes.