Nontradables Are Cited as a Reason Why Purchasing Power Parity

question 98

Multiple Choice

Nontradables are cited as a reason why purchasing power parity doesn't hold because:

• A) goods that you can't transport cannot be sold for a profit elsewhere, even if the price differs in different locations.
• B) there is no economic opportunity to profit if the goods cannot be sold in another market for another price.
• C) location-specific goods are impossible to calculate a price elsewhere for.
• D) All of these statements are true.

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Definitions:

Natural Resources

Assets that occur in nature, such as minerals, timber, and water, which can be used to produce goods and services.

Research and Development

Activities undertaken by a company to innovate and introduce new products or services, often involving experimental or theoretical work.

Fixed Asset Turnover

A financial ratio that measures a company's efficiency in using its fixed assets to generate sales.

Accelerated Depreciation

A depreciation method that allows for a higher depreciation charge in the early years of an asset's life and less in the later years.