If It Takes One Country One Unit of Labor to Produce

question 37

Multiple Choice

If it takes one country one unit of labor to produce either a computer or a TV but it takes the other country two units of labor to produce a computer and only one to produce a TV, then the first country has

• A)a comparative advantage in both goods.
• B)an absolute advantage in both goods.
• C)both a comparative and absolute advantage in both goods.
• D)an absolute and comparative advantage in production of computers.

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Definitions:

Upgrade Cost

The expense incurred to improve the quality, features, or performance of an asset, product, or system beyond its original specifications.

Overhaul

A comprehensive inspection, maintenance, and repair process to restore equipment, machines, or systems to optimum working condition.

Extraordinary Repairs

Large, infrequent expenditures that extend the useful life of an asset beyond its original forecast.

Straight-Line Method

The straight-line method is a depreciation technique that allocates an equal amount of depreciation each year over the useful life of an asset.