In Canada,the Average Worker Can Produce 10 Computers or Six

question 131

Multiple Choice

In Canada,the average worker can produce 10 computers or six cars a year.In the United States,the average worker can produce 12 computers or 10 cars a year.Thus:

• A) Canada has a comparative advantage in producing both goods.
• B) Canada has a comparative advantage in the production of computers.
• C) the United States has a comparative advantage in producing both goods.
• D) the United States has a comparative advantage in the production of computers.

Understand the significance of price to earnings ratio in evaluating company stock.

Understand the concept of credit risk and how it affects bond interest rates.

Explain the role of financial markets in allocating resources and achieving market equilibrium.

Describe the structure, function, and types of financial instruments and intermediaries.

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Definitions:

Contribution Margin Ratio

A financial metric that shows what percentage of sales revenue is available to cover fixed costs and generate profit after variable costs have been paid.

Variable Costs

Costs that change in proportion to the level of activity or volume of goods produced by a business.

Sales Decrease

A drop in the volume or amount of products or services sold by a company within a specific period.

Variable Costing

A costing method that includes only variable production costs (materials, labor, and overhead) in the cost of goods sold and treats fixed overhead costs as period expenses.