Table 3-6 Assume That Maya and Miguel Can Switch Between Producing Mixers

question 35

Multiple Choice

Table 3-6
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.

-Refer to Table 3-6.Maya has an absolute advantage in the production of

• A) both goods and a comparative advantage in the production of mixers.
• B) both goods and a comparative advantage in the production of toasters.
• C) neither good and a comparative advantage in the production of mixers.
• D) neither good and a comparative advantage in the production of toasters.

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Definitions:

Non-monetary Assets

Assets that are not in the form of cash or cannot be easily converted to cash, such as property, plant, and equipment.

Spot Rate

The current price in the foreign exchange market at which one currency can be exchanged for another currency.

Closing Rate

The closing rate is the exchange rate of a foreign currency against a home currency at the close of the accounting period, used in translating foreign currency financial statements.

Forward Rate

The agreed-upon future exchange rate between two currencies in a forward contract.