Table 2-8 Table 2-8 Shows the Number of Labor Hours

question 119

Multiple Choice

Table 2-8
Table 2-8 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea.
-Refer to Table 2-8.Does either China or South Korea have an absolute advantage and if so,in what product?

• A) South Korea has an absolute advantage in wheat.
• B) China has an absolute advantage in wheat.
• C) South Korea has an absolute advantage in both products.
• D) China has an absolute advantage in digital cameras.

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Definitions:

Business Combination

A business making an investment in another business by acquiring a controlling share, often greater than 50%, of the outstanding voting stock of another corporation by paying cash or exchanging stock.

Accrued Interest

Interest that has been incurred but not yet paid, reflecting the cost of borrowing or the earnings from lending money over a specific period.

Semiannual Interest

Interest on a loan or investment calculated and paid twice a year, typically at a fixed rate.

Parent Company

A parent company is a corporation that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors.