Figure: Comparative Advantage Eastland and Westland Produce Only Two Goods, Boxes of Peaches

question 68

Essay

Figure: Comparative Advantage
Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. (Figure: Comparative Advantage) Look at the figure Comparative Advantage.Eastland has an absolute advantage in producing:
A.oranges only.
B.peaches only.
C.both oranges and peaches.
D.neither oranges nor peaches.

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Definitions:

Internal Rate of Return

A financial metric used to gauge the profitability of potential investments.

NPV

An evaluation metric used to estimate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Capital Budgeting Analysis

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization.

Payback

A capital budgeting method that calculates the length of time required to recoup the original investment.