If the Opportunity Cost of Producing Cheese Is Higher in Greece

question 108

Multiple Choice

If the opportunity cost of producing cheese is higher in Greece than it is in Italy, then:

• A) Greece should specialize in producing cheese.
• B) Italy should specialize in producing cheese.
• C) both Greece and Italy should produce cheese.
• D) Greece gives up fewer goods to produce cheese than Italy does.

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Definitions:

ROA

Return on Assets, a financial ratio that indicates how profitable a company is relative to its total assets, measuring how efficient management is in using assets to generate earnings.

Debt/Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how efficiently a company is using its equity to create profits.

P/E Ratio

The price-to-earnings ratio, a valuation metric for assessing a company's current share price relative to its per-share earnings.