Table 3-3 Assume That Zimbabwe and Portugal Can Switch Between Producing Toothbrushes

question 304

Multiple Choice

Table 3-3
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.

-Refer to Table 3-3.Zimbabwe has an absolute advantage in the production of

• A) toothbrushes and a comparative advantage in the production of toothbrushes.
• B) toothbrushes and a comparative advantage in the production of hairbrushes.
• C) hairbrushes and a comparative advantage in the production of toothbrushes.
• D) hairbrushes and a comparative advantage in the production of hairbrushes.

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Definitions:

Inventory

The total amount of goods and materials held by a company for the purpose of sale, use in production, or other operational purposes.

Financial Leverage

The use of borrowed funds with the intent to increase the potential return on investment.

Capital Structure

The blend of types of financing a company uses, including debt, equity, and other securities, to fund its operations and growth.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership interest in the company.