If England Uses One Week's Time to Produce Ten Yards

question 34

True/False

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine, then England has a comparative advantage in the production of cloth.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows of an investment to present value, reflecting the opportunity cost of capital.

Cost Savings

Reductions in expenditures achieved through methods such as negotiation, effciency improvements, or substitution.

Pretax Return

The profit earned by a business before the deduction of tax expenses.

Net Present Value

A financial metric that calculates the difference between the present value of cash inflows and the present value of cash outflows over a period of time.