In Terms of Explaining Why Some Countries Export Automobiles,consumer Electronics,and

question 55

Multiple Choice

In terms of explaining why some countries export automobiles,consumer electronics,and machine tools,while other countries export chemicals,watches,and jewellery,David Ricardo's theory of comparative advantage offer an explanation in terms of

• A) international differences in intellectual capital.
• B) international differences in labour productivity.
• C) the interplay between the proportions in which the factors of production (such as land, labour, and capital) are available in different countries and the proportions in which they are needed for producing particular goods.
• D) the cultural histories of the exporting nations.
• E) the geographic location of potential trading partners.

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Definitions:

WACC

A measure of a firm's blended cost of capital across all sources, including equity and debt.

NPV

Net Present Value is the calculation used to determine the value of future cash flows in today's dollars, subtracting the initial investment.

Multiple IRRs

Situations where a project or investment has more than one internal rate of return, occurring with alternating cash flows (positive and negative).

Cash Flows

Cash flow is the net amount of cash being transferred into and out of a business, considered essential for its operation, liquidity, and financial health.