Assume That the Opportunity Cost of Producing Wheat Is Lower

question 36

Multiple Choice

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia. Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia. Which country should specialise in producing cars?

• A) Australia and Malaysia.
• B) Australia.
• C) Malaysia.
• D) Both countries have to specialise in producing wheat.

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Definitions:

Conversion Ratio

The number of common shares received upon the conversion of a convertible security, such as a convertible bond or preferred stock.

Current Market

The existing conditions within a marketplace at a particular time, including trends, prices, and available inventory.

SIVs

Structured Investment Vehicles, which are investment funds that manage a portfolio of income-generating assets by borrowing in short-term markets to invest in long-term securities.

Commercial Paper

Short-term, unsecured promissory notes, issued by companies, typically used for the financing of accounts receivable, inventories, and meeting short-term liabilities.