Table 2-9 Table 2-9 Shows the Number of Labor Hours Required to of Labor

question 153

Multiple Choice

Table 2-9

Table 2-9 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras.
-Refer to Table 2-9.Does either Guatemala or Honduras have an absolute advantage and if so, in what product?

• A)Guatemala only has an absolute advantage in producing canoes.
• B)Honduras only has an absolute advantage in producing canoes.
• C)Guatemala has an absolute advantage in producing both products.
• D)Honduras only has an absolute advantage in producing sailboats.

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Definitions:

Prepaid Insurance

The portion of an insurance premium that has been paid in advance and is recognized as an asset until it is used.

Accrued Salaries

Salaries that have been incurred but not yet paid, representing an expense for the company and a liability until the payment is made.

Periodic Inventory System

An inventory accounting system where inventory levels and cost of goods sold are determined at the end of an accounting period through physical counts.

Merchandise

Goods that are bought and sold in the course of business, typically in a retail or wholesale setting.