The Accompanying Table Shows the Output (Either Machines or Wine)

question 213

Multiple Choice

$$\begin{array} { | l | c | c | } \hline & \text { Machines } & \text { Wine } \\\hline \text { France } & 3 & 1 \\\hline \text { Germany } & 1 & 1 \\\hline\end{array}$$ The accompanying table shows the output (either machines or wine) that each unit of input in France and Germany can produce. We see that

• A) France has an absolute advantage over Germany in producing either output.
• B) Germany has an absolute disadvantage in producing wine.
• C) Germany has no absolute advantage over France in producing either output.
• D) France will see no economic basis for trading with Germany.

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Definitions:

Process Costing

An accounting methodology used in industries where production is continuous and costs can be assigned to specific processes or departments in the production cycle.

Weighted-Average Method

An inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold.

Conversion Costs

Expenses related to transforming raw materials into finished goods, comprising direct labor and manufacturing overhead.

Process Costing

A costing method used in manufacturing where costs are assigned to batches or production runs, typically suitable for standardized products.