Use the Following to Answer Question(s): Production Possibilities Schedule for Two

question 55

Multiple Choice

Use the following to answer question(s) : Production Possibilities Schedule for Two Commodities

-(Exhibit: Production Possibilities Schedule for Two Commodities) Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of units of commodity X each country would have to forgo to produce the additional units of commodity Y indicated.Further assume that the only input is labor and that it remains fully employed.We see from the table that the United States:

• A) has an absolute advantage in the production of both goods and a comparative advantage in the production of commodity X.
• B) has an absolute advantage in the production of both goods and a comparative advantage in the production of commodity Y.
• C) does not have an absolute advantage in the production of either good, but it has a comparative advantage in the production of commodity X.
• D) does not have an absolute advantage in the production of either good, but it has a comparative advantage in the production of commodity Y.

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Definitions:

Systematic Risk

The risk inherent to the entire market or market segment, also known as un-diversifiable risk or market risk.

Low-beta Stocks

Stocks with a beta coefficient lower than one, indicating they are less volatile than the market and tend to offer more stable returns.

High-beta Stocks

Stocks that are more volatile than the market average, possessing a beta value greater than 1, indicating they have a higher risk and potential return.

Systematic Risk

A type of risk that affects all securities in a market or market segment, unable to be lessened through diversification.