An Automobile Company Has Two Factories, One in Vietnam and One

question 44

Multiple Choice

An automobile company has two factories, one in Vietnam and one in Australia, each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmission per day.

• A)The Vietnamese factory has an absolute advantage producing both engines and transmissions.
• B)The Australian factory has an absolute advantage in the production of transmissions.
• C)The Vietnamese factory has a comparative advantage in the production of transmissions.
• D)Which factory has an advantage is irrelevant since the theory of comparative advantage only applies to countries, not companies.

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Definitions:

Total Sales

The aggregate revenue generated from the sale of goods or services by a company within a specific period.

Collections

The process of pursuing payments of debts owed by individuals or businesses, often conducted by creditors or assigned collection agencies.

Patent Amortization

The gradual expensing of the cost of a patent over its useful life, reflecting the consumption of its economic benefits over time.

Accounts Receivable

Money owed by customers to a company for products or services that have been delivered or used but not yet paid for.