For Each Bottle of Wine That France Produces, It Gives

question 92

Multiple Choice

For each bottle of wine that France produces, it gives up the opportunity to make 10 kilograms of cheese. Italy can produce one bottle of wine for every 25 kilograms of cheese it produces. Which of the following is true about the comparative advantage between the two countries?

• A)Italy has the comparative advantage in cheese.
• B)Italy has the comparative advantage in wine.
• C)France has the comparative advantage in wine and cheese.
• D)France has the comparative advantage in wine.

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Definitions:

Myopic Behavior

Short-sighted decision-making focusing on immediate benefits rather than considering long-term consequences, often seen in investment choices.

Mean-variance Optimizers

A mathematical process used in finance to construct an investment portfolio that aims to maximize returns for a given level of risk.

Portfolio Beta

A measure of the volatility, or systematic risk, of a portfolio of investments in comparison to the market as a whole.

Market Expected Rate

The rate of return anticipated by investors in the market, based on the investment's risk and prevailing economic conditions.