SCENARIO: ABSOLUTE AND COMPARATIVE ADVANTAGE

question 139

Multiple Choice

SCENARIO: ABSOLUTE AND COMPARATIVE ADVANTAGE
Poland requires 4 hours of labor to produce a ton of coal and 10 hours of
Labor to produce 10 bushels of wheat.The Czech Republic requires 6
Hours of labor to produce a ton of coal and 10 hours of labor to produce
10 bushels of wheat.
Reference: Ref 2­5
(Scenario: Absolute and Comparative Advantage) Suppose that the
International price of coal is 4 1/4 bushels of wheat per ton of coal.
Which country is likely to have the larger gain from trade?

• A)Poland
• B)the Czech Republic
• C)Neither country has the larger gain.
• D)Both countries have the larger gain.

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Definitions:

Income Taxes

Taxes levied on the income of individuals or businesses by the government.

Operating Cash Inflow

Cash generated from the core business operations of a company during a specific period.

Straight-Line Depreciation

An approach to evenly spread the expense of an asset over its period of utility.

Working Capital

The gap between a firm's present assets and liabilities, showing its operational efficiency and ability to cover short-term obligations.