With a Given Amount of Labour and Other Resources, Producers

question 90

Multiple Choice

With a given amount of labour and other resources, producers in the nation of Alphania can produce either 100 widgets or 50 wackets. Thus, in Alphania two widgets must be given up to produce each wacket. Using the same amount of labour and resources, producers in Betania can produce 40 widgets or 40 wackets-so one widget must be given up for each wacket produced. Based on this information, which statement is true?

• A) Betania has an absolute advantage in producing both goods.
• B) Betania has a comparative advantage in producing wackets.
• C) Alphania has a comparative advantage in producing wackets, but Betania has an absolute advantage in producing wackets.
• D) Alphania has a comparative advantage in producing both goods.

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Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, not including cash equivalents.

Future Economic Benefit

An advantage or profitable impact expected to be achieved in future periods from an asset.

Assets

Resources owned or controlled by a business that are expected to produce economic value.

Liabilities

Financial obligations or debts that a company owes to external parties, which must be settled over time through the transfer of economic benefits including money, goods, or services.