Table 2.6 Table 2.6 Shows the Number of Labour Hours Required to of Labour

question 172

Multiple Choice

Table 2.6

Table 2.6 shows the number of labour hours required to produce a digital camera and a kilo of wheat in China and South Korea.
-Refer to Table 2.6. What is China's opportunity cost of producing one digital camera?

• A)0.04 kilos of wheat
• B)4 kilos of wheat
• C)20 kilos of wheat
• D)40 kilos of wheat

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Definitions:

Market Interest Rate

The prevailing rate at which interest is offered on deposits or loans in the financial markets for a particular term and risk profile.

Effective Interest Rate

An adjusted interest rate that accurately reflects the cost of borrowing including fees and compounding.

Stated Rate

The annual interest rate declared on a loan or investment, not accounting for compounding or additional fees.

Effective Interest Method

A method used in accounting to allocate the interest income or expense over the relevant period, adjusting for the impact of discount or premium on the purchase of bonds.