An Automobile Company Has Two Factories, One in Vietnam and One

question 42

Multiple Choice

An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day. The Australian factory can produce either 100 engines or 75 transmissions per day.

• A)The Vietnamese factory has an comparative advantage producing both engines and transmissions.
• B)The Australian factory has an absolute advantage in the production of transmissions.
• C)The Vietnamese factory has a comparative advantage in the production of transmissions.
• D)The Australian factory has a comparative advantage in the production of transmissions.

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Definitions:

Balance Sheet

A financial statement that presents a company's assets, liabilities, and shareholders' equity at a particular point in time, offering a snapshot of its financial condition.

Future Expenses

Anticipated costs or financial obligations a company expects to incur in the future.

Note Payable

A written promise to pay a specific sum of money at a future date, typically including interest payments.

Promissory Note

A financial instrument in which one party (the issuer) promises in writing to pay a determinate sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms.