In India 3 Units of Labour Are Needed to Produce

question 77

Multiple Choice

In India 3 units of labour are needed to produce 1 unit of cloth and 5 units of labour are needed to produce 1 unit of food;in Australia 2 units of labour are needed to produce 1 unit of cloth and 2 units of labour are needed to produce 1 unit of food.It is correct to state that

• A)India has a comparative advantage in producing cloth.
• B)India has an absolute advantage in producing cloth.
• C)India has no comparative advantage with cloth or wheat.
• D)Australia has a comparative advantage in producing cloth.

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Definitions:

Permanent Differences

These are differences between taxable income and accounting income that will not reverse in future periods.

Interperiod Income Tax Allocation

The process of allocating income taxes over various accounting periods because of temporary differences that cause taxable income to differ from accounting income.

Deferred Tax

An accounting concept referring to a temporary difference between the tax expense shown in the income statement and the tax payable to the tax authorities, due to timing or methodological differences in recognizing revenue and expenses.

Income Tax Expense

The amount of money that a company or individual owes to the government based on their taxable income.