Use the Production Possibilities Data Below for Lebos and Slavia

question 109

Multiple Choice

Use the production possibilities data below for Lebos and Slavia to answer the following question(s) . Table 2-1

Refer to Table 2-1. Which of the following is true?

• A) Lebos has the comparative advantage in both goods.
• B) Lebos has the comparative advantage in food.
• C) Slavia has the comparative advantage in food.
• D) It would be impossible for Lebos and Slavia to gain from trade.

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Definitions:

Currency Swap

A financial agreement to exchange currency between two parties at a set rate, often used to hedge currency risk.

Interest Rate Swaps

A financial derivative contract between two parties to exchange interest rate payments on a specified principal amount, typically involving the swap of fixed for variable interest rates.

Variable Rate

A type of interest rate that changes over time, usually in connection with a specific index or benchmark rate.

Index

An index is a statistical measure or indicator that tracks the performance of a basket of assets, stocks, or other financial instruments, often used as a benchmark for investment performance.