Use the Following Scenario to Answer the Following Questions

question 83

Multiple Choice

Use the following scenario to answer the following questions:
Rosa and Dirk produce basketballs and footballs.Rosa can produce six basketballs per hour or two footballs per hour.Dirk can produce three basketballs per hour or four footballs per hour.
-Based on the scenario,which of the following is true?

• A) Dirk has an absolute advantage in producing basketballs,but not footballs.
• B) Dirk has an absolute advantage in producing footballs,but not basketballs.
• C) Dirk has an absolute advantage in producing both goods.
• D) Dirk has an absolute advantage in producing neither good.
• E) Rosa has a comparative advantage in producing both goods.

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Definitions:

Commercial Substance

A situation where the risk, timing, or amount of the entity's future cash flows changes as a result of a financial transaction.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, where the investment is recorded at original cost and subsequently adjusted to reflect the investor's share of the net assets of the investee.

Carrying Value

The book value of an asset or liability on a company's balance sheet, representing its value according to accounting standards.

Unrealized Gain

A profit that results from an investment that has increased in value but has not yet been sold for cash.