Suppose an American Worker Can Make 50 Pairs of Gloves

question 41

Multiple Choice

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day.On the other hand,a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day.Using the concepts of advantage and trade,we can say that the opportunity cost of one pair of gloves is:

• A) lower for the United States than Bangladesh, therefore the United States has a comparative advantage in glove production.
• B) higher for the United States than Bangladesh, therefore the United States has a comparative advantage in radish production.
• C) the same for both the United States and Bangladesh, therefore no comparative advantage exists.
• D) the same for both the United States and Bangladesh, therefore they both have the comparative advantage in glove production.

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Definitions:

Semiannual Interest Payments

Semiannual interest payments refer to the practice of paying interest on a loan or bond twice a year.

Bonds

Fixed-income securities that represent a loan made by an investor to a borrower, typically corporate or governmental, entitling the holder to interest payments and the return of principal at maturity.

Par Value

The nominal value of a bond or stock as declared by the issuer, which might not correspond with its actual market price.

Profit Margin

A financial metric expressing the percentage of revenue that exceeds the costs of goods sold, indicating the profitability of a company's sales.