Table 3-3 Assume That Zimbabwe and Portugal Can Switch Between Producing Toothbrushes

question 188

Multiple Choice

Table 3-3
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.

-Refer to Table 3-3.Portugal has an absolute advantage in the production of

• A) toothbrushes and a comparative advantage in the production of toothbrushes.
• B) toothbrushes and a comparative advantage in the production of hairbrushes.
• C) hairbrushes and a comparative advantage in the production of toothbrushes.
• D) hairbrushes and a comparative advantage in the production of hairbrushes.

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Definitions:

Quarterly Compounded Nominal Rate

A nominal interest rate compounded four times a year.

Effective Rate

The annual interest rate that accounts for compounding within the year.

Compounded Annually

The process where interest earned is added to the principal sum once a year, and future interest is earned on the new total.

Compounded Nominal Annual Rate

The rate of interest for one year, without taking inflation into account, which is compounded at specified intervals within that year.