-Refer to Table 2-10

question 37

Essay

-Refer to Table 2-10. This table shows the number of labour hours required to produce a digital cameras and a bushel of wheat in China and South Korea.
a. Which country has an absolute advantage in the production of digital cameras?
b. Which country has an absolute advantage in the production of wheat?
c. What is China's opportunity cost of producing one digital camera?
d. What is South Korea's opportunity cost of producing one digital camera?
e. What is China's opportunity cost of producing one pound of wheat?
f. What is South Korea's opportunity cost of producing one pound of what?
g. If each country specialises in the production of the product in which it has a comparative advantage, who should produce digital cameras?
h. If each country specialises in the production of the product in which it has a comparative advantage, who should produce wheat?

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Definitions:

Inventory Cost

The total cost incurred to acquire inventory and bring it to its current condition and location, including purchase prices, freight, and handling fees.

Operating Lease

A leasing agreement allowing the lessee to use an asset temporarily without transferring the risks and rewards of ownership.

Sales-Type Lease

A leasing arrangement where the lessor recognizes immediate profit on the leased asset as in a sale, based on the difference between the fair value of the leased asset and its cost or carrying amount.

Direct-Financing Lease

A lease agreement where the lessor effectively finances the asset for the lessee, recognizing interest revenue over the lease term.