The Following Table Shows the Units of Output a Worker

question 33

Multiple Choice

The following table shows the units of output a worker can produce per month in country A and country B. Country Which of the following statements about absolute advantage is true?

• A) Country A has the absolute advantage in the production of food while country B has the absolute advantage in the production of electronics.
• B) Country A has the absolute advantage in the production of both food and electronics.
• C) Country B has the absolute advantage in the production of both food and electronics.
• D) All of these.

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Definitions:

Ownership Shares

Equity stakes in a corporation, represented by stock, that signify ownership rights and claims on the company's assets and earnings.

Free Cash Flow

Free cash flow is a measure of financial performance that shows the amount of cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Discount Rate

The discount rate applied in the process of discounted cash flow (DCF) analysis to calculate the current value of anticipated future cash flows.

Abnormal Earnings Approach

A valuation method that estimates a company's value based on the prediction of future abnormal earnings, defined as earnings in excess of a normal return on investment.