If Daniel Produces One Pair of Shoes in 4 Hours

question 178

Multiple Choice

If Daniel produces one pair of shoes in 4 hours and Sarah produces one pair of shoes in 3 hours, then

• A)Sarah has a comparative advantage in shoemaking
• B)Daniel has a comparative advantage in shoemaking
• C)Sarah has an absolute and a comparative advantage in shoemaking
• D)Daniel has an absolute and a comparative advantage in shoemaking
• E)Sarah has an absolute advantage in shoemaking

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Definitions:

EPS

Earnings Per Share, a financial metric that divides a company's profit by the number of its shares outstanding.

Market Capitalization Rate

The expected return on an investment in a market portfolio, based on the market price of risk.

Constant-Growth DDM

A model for valuing a company's stock by using predicted dividends and discounting them back to present value assuming a constant growth rate.

Preferred Share

A class of ownership in a corporation with a higher claim on assets and earnings than common stock.