Consider the Following Information About the Production of Two Goods,X

question 28

Multiple Choice

Consider the following information about the production of two goods,X and Y,in two countries,A and B:
∙ In Country A it takes X_a units of resources to produce one unit of X and Y_a units of resources to produce one unit of Y.
∙ In Country B it takes X_b units of resources to produce one unit of X and Y_b units of resources to produce one unit of Y.
∙ Assume the amount of resources used to produce the goods in the two countries can be compared unambiguously.
-Refer to Table 32-1.Country A has an absolute advantage in producing good X if

• A)(X_a/Y_a)is less than (X_b/Y_b).
• B)X_a is less than X_b.
• C)X_a is less than Y_a.
• D)(X_a/X_b) is less than (Y_a/Y_b).
• E)X_a = X_b.

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Definitions:

Cost of Goods Sold

The immediate expenses incurred in the production of a company's sold goods, encompassing materials, labor, and overhead costs.

Operating Expenses

Expenses incurred during regular business operations, such as rent, utilities, and salaries, but excluding cost of goods sold.

Cash Payments

Outflow of cash as a result of transactions, such as paying expenses, purchasing assets, or repaying debt.

Free Cash Flow

The amount of cash generated by a company’s operations after accounting for capital expenditures, available for dividends, debt repayment, or reinvestment.