Izzy Amador Is a Highly Talented Tattoo Artist

question 169

Multiple Choice

Izzy Amador is a highly talented tattoo artist.An economist would argue she has chosen to specialize in tattoo art for all of the following reasons, except

• A)her tattoos are highly esteemed by tattoo lovers who are willing to pay very high prices.
• B)for her, this is the most lucrative way to purchase the products that she wants to consume.
• C)her opportunity cost of pursuing another career is very low.
• D)she obviously has a comparative advantage in tattoo art.

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Definitions:

Interest Rate Parity

A theory suggesting that the difference in interest rates between two countries is equal to the differential between the forward exchange rate and the spot exchange rate.

Annualized Return

The geometric average amount of money earned by an investment each year over a given time period, expressed as a percentage.

Spot Exchange Rate

The current market price for exchanging one currency for another, used for immediate currency transactions.

Exchange Rate

The value of one currency for the purpose of conversion to another.