Figure 2.7 Figure 2.7 Shows the Production Possibility Frontiers for Pakistan and Possibility

question 67

Multiple Choice

Figure 2.7

Figure 2.7 shows the production possibility frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews.
-Refer to Figure 2.7. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of cotton?

• A)Indonesia
• B)They have the same advantage.
• C)Pakistan
• D)cannot be determined

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Definitions:

Firm Offer

A binding offer stating in writing how long it is to remain open that cannot be revoked during that period by the offeror.

Guaranteed Price

A price assured by one party to another, often used in contracts to specify the minimum payment that will be received for goods or services.

Confirmation Letter

A written communication that verifies and confirms the details of a previous agreement or conversation.

Oral Agreement

An agreement between parties that is made through spoken words and is legally binding though not recorded in written form.