Assume Japan Must Forego Producing 60 Computers for Each Automobile

question 97

Multiple Choice

Assume Japan must forego producing 60 computers for each automobile it produces.Moreover,the United States can produce one automobile if it forgoes producing 80 computers.Which of the following is true?

• A)The United States has a lower opportunity cost of producing automobiles.
• B)The United States has a comparative advantage in producing automobiles.
• C)Japan has a comparative advantage in producing computers.
• D)No trade will occur between Japan and the United States.
• E)Japan has a lower opportunity cost of producing automobiles.

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Definitions:

First-In, First-Out

An inventory valuation method that assumes goods are sold in the order they are acquired, so older inventory is used up first.

Cost Of Production Report

A detailed report summarizing the total costs involved in manufacturing a product, including material, labor, and overhead costs.

Department Accountability

The responsibility of departments within an organization to perform their functions correctly, efficiently, and to be answerable for their actions and outcomes.

Conversion Cost

The sum of labor costs and overhead costs used to convert raw materials into finished products.