Figure 27 Figure 2

question 58

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:

Preferred Shares

A class of ownership in a corporation that has a higher claim on assets and earnings than common shares, usually with fixed dividends.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements and is used to evaluate the cost of funding projects via equity financing.

Dividend

A disbursement by a company to its shareholders, often from its profit reserves.

Growth Rate

The rate at which a company's earnings, revenue, or another financial metric increases over a specific period.