Dacians and Romans Are at War and They Are Both

question 77

Multiple Choice

Dacians and Romans are at war and they are both producing bows and arrows.The Dacian weapon-smith can make 10 arrows or 2 bows in one hour,whereas the Roman weapon-smith needs two hours to make 10 arrows,but he can make 3 bows in two hours.Which of the following is correct?

• A) The Dacians have comparative advantage in making both arrows and bows
• B) The Romans have comparative advantage in making both arrows and bows
• C) The Dacians have comparative advantage in making bows
• D) The Romans have comparative advantage in making bows
• E) The Romans have comparative advantage in making arrows

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Definitions:

Capital

Financial assets or the financial value of assets, such as cash, used by a business to fund its operations and investments.

Levered

Refers to the use of debt (borrowed funds) to amplify the potential return of an investment.

Bankruptcy

A legal proceeding involving a person or business that is unable to repay their outstanding debts, leading to the assets being allocated to creditors.

Indirect Costs

Expenses that are not directly attributable to a specific product or activity but are necessary for the business's operation, such as utilities or administrative salaries.