Use the Figure Below to Answer the Following Questions

question 73

Multiple Choice

Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.

-Refer to Table 2.4.1. Which one of the following is true?

• A)Romulus has both an absolute advantage and a comparative advantage in the production of Y.
• B)Romulus has both an absolute advantage and a comparative advantage in the production of X.
• C)Vulcan has a comparative advantage in the production of X.
• D)Romulus has a comparative advantage in the production of X.
• E)Vulcan should specialize in the production of X.

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Definitions:

Cyclical Unemployment

Unemployment caused by fluctuations in the economic cycle, such as expansions and recessions, often related to changes in demand.

Real Rate

The real rate is the interest rate adjusted for inflation, reflecting the true cost of borrowing or the real yield on an investment.

Nominal Rate

The stated interest rate of an investment or loan, without adjustment for inflation or other factors that affect the real rate of return.

Rate Of Inflation

The percentage increase in the general level of prices for goods and services in an economy over a period of time.