If China Is Capable of Producing Either Teddy Bears or Toy

question 123

Multiple Choice

If China is capable of producing either teddy bears or toy trains or some combination of the two, then

• A)China should specialize in the product in which it has an absolute advantage.
• B)it would be impossible for China to have an absolute advantage over another country in both products.
• C)it would be difficult for China to benefit from trade with another country if China is efficient in the production of both goods.
• D)China's opportunity cost of teddy bears is the inverse of its opportunity cost of toy trains.

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Definitions:

Average Collection Period (ACP)

A financial ratio that measures how long it takes to collect on credit sales. Also called days sales outstanding (DSO).

Credit Policy

A set of guidelines that a company follows to determine credit terms for customers, which encompass payment period, amount of credit, and the discount terms.

Cash Discount

A reduced price offered by a seller for goods or services if the buyer pays in cash, or within a specified time period, encouraging early payment.

Receivables

Money that is owed to a company by its customers for goods or services provided on credit, represented as assets on the balance sheet.