Figure 3-3 -Refer to Figure 3-3.Suppose Fred Specializes in the Good in in the Good

question 215

Multiple Choice

Figure 3-3

-Refer to Figure 3-3.Suppose Fred specializes in the good in which he has a comparative advantage,and Ginger specializes in the good in which she has a comparative advantage.Then

• A)total production of ballet slippers would be 6 and total production of tap shoes would be 6.
• B)total production of ballet slippers would be 8 and total production of tap shoes would be 6.
• C)total production of ballet slippers would be 8 and total production of tap shoes would be 8.
• D)total production of ballet slippers would be 8 and total production of tap shoes would be 10.

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Definitions:

Variable Cost Ratio

This is a financial metric that represents the variable costs incurred as a percentage of sales, showing how much of each sales dollar is eaten by variable costs.

Degree of Total Leverage

The degree of total leverage measures the sensitivity of a company's net income to a change in sales, combining both operating and financial leverage effects.

Fixed Operating Costs

Expenses that remain constant regardless of the amount of output or sales, including rent, wages, and insurance premiums.

Coupon Interest Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value, payable to the bondholder at specified intervals.