Suppose China Can Produce Either 600 Telephones or 400 DVD

question 65

Multiple Choice

Suppose China can produce either 600 telephones or 400 DVD players,and Japan can produce either 400 telephones or 200 DVD players.Implicitly,China has

• A)A comparative but not necessarily an absolute advantage in DVD players.
• B)An absolute but not necessarily a comparative advantage in DVD players.
• C)Both an absolute and a comparative advantage in DVD players.
• D)Neither a comparative nor an absolute advantage in DVD players.

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Definitions:

Direct Labor

Labor costs that can be easily traced to the production of specific goods or services.

Factory Overhead

Refers to the indirect costs associated with manufacturing, not directly tied to a specific unit of product, such as utilities and maintenance expenses.

Assembler's Wages

The compensation paid to workers responsible for assembling products or components in a manufacturing process.

Factory Overhead

All the indirect costs associated with manufacturing, excluding direct materials and direct labor. Examples include utilities, depreciation on manufacturing equipment, and factory manager salary.