Suppose That the United States Can Make 15 Cars or 20

question 10

Multiple Choice

Suppose that the United States can make 15 cars or 20 bottles of wine with one year's worth of labor.France can make 10 cars or 18 bottles of wine with one year's worth of labor.From these numbers, we can conclude that

• A)the United States has a comparative advantage in the production of cars.
• B)France has a comparative advantage in the production of wine.
• C)the United States has an absolute advantage in the production of cars.
• D)All of the above are correct.

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Definitions:

Nonprofit Organization

An organization that operates for the public or social benefit, rather than for the purpose of making profits for owners or shareholders.

American Red Cross

The American Red Cross is a humanitarian organization that provides emergency assistance, disaster relief, and education inside the United States.

Contribution Margin

The amount by which a product's sales revenue exceeds its variable costs, indicating how much contributes to covering fixed costs and generating profit.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities; also known as stockholders' equity, representing the owners' equity in the company.