Table 2-8 Table 2-8 Shows the Number of Labor Hours Required to of Labor

question 73

Multiple Choice

Table 2-8

Table 2-8 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea.
-Refer to Table 2-8.Does either China or South Korea have an absolute advantage and if so, in what product?

• A)South Korea only has an absolute advantage in wheat.
• B)China only has an absolute advantage in wheat.
• C)South Korea has an absolute advantage in both products.
• D)China only has an absolute advantage in digital cameras.

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Definitions:

LIFO

Last In, First Out, an inventory accounting method where the most recently produced items are recorded as sold first.

FIFO

"First In, First Out," an inventory valuation method where goods purchased or produced first are sold or used first.

Exchange Gain

A profit resulting from foreign currency transactions, due to favorable changes in exchange rates.

Exchange Rate

The rate at which one currency can be exchanged for another, often determined by financial markets or government policy.