Consider Two Countries That Can Produce Wheat and Coffee

question 59

Multiple Choice

Consider two countries that can produce wheat and coffee.The gains from trade when the two countries have different opportunity costs are realized when

• A)production possibility boundaries shift inward.
• B)the two countries continue to produce the same quantities of wheat and coffee.
• C)each country has an absolute advantage in one of the two commodities.
• D)resources are reallocated within the two countries such that each specializes in the production of the good in which it has an absolute advantage.
• E)resources are reallocated within the two countries such that each specializes in the production of the good in which it has a comparative advantage.

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Definitions:

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively management is using shareholders’ funds to generate profit.

Debt Ratio

A financial metric that assesses a firm's level of indebtedness by dividing its total liabilities by its total assets.

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets that are financed by stockholders' equity.

Net Income

The company's net earnings following the subtraction of all costs and taxes from its income.