Suppose That a Worker in Country a Can Make Either

question 25

Multiple Choice

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Which of the following is true?

• A)Country B should produce tablets and Country A should produce iPods,and they could benefit from trade.
• B)Country B should produce iPods and Country A should produce tablets,and they could benefit from trade.
• C)Neither country can benefit from trade since no comparative advantage exists.
• D)Because Country B has the absolute advantage tablets,they should specialize in the production of tablets.

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Definitions:

Cost Of Equity Capital

The return that investors expect for investing in a company's equity, taking into account the perceived risk of the investment.

Risk-Adjusted Cost

A financial assessment that accounts for the risk of an investment, adjusting the cost to reflect potential uncertainties.

Lower Share Prices

Lower share prices indicate a decrease in the market price of a company’s stock, often reflecting changes in the company's financial health or market conditions.

Growth Opportunities

Prospects or opportunities for a business to expand its operations, increase sales, and enhance profitability.