Assume That Bulgaria Has a Comparative Advantage in Producing Sandals

question 68

Multiple Choice

Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria.We can conclude that

• A)Bulgaria also has an absolute advantage in producing sandals relative to Finland.
• B)Bulgaria has a lower opportunity cost of producing sandals relative to Finland.
• C)Finland has an absolute disadvantage in producing sandals relative to Bulgaria.
• D)labour costs are higher for sandal producers in Finland than in Bulgaria.

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Definitions:

Net Income

The total profit of a company after all revenues, costs, and expenses have been deducted, also known as the bottom line.

Long-Term Investments

Assets that a company intends to hold for more than one year, such as stocks, bonds, real estate, or other financial instruments.

Fair Value

An estimate of the appropriate value of an asset or liability based on current market conditions.

Available-For-Sale

A classification for financial assets implying that they can be sold in the future; these assets are not necessarily held till maturity and their unrealized gains or losses are generally reported in other comprehensive income.