Table 3-6 Assume That Maya and Miguel Can Switch Between Producing Mixers

question 103

Multiple Choice

Table 3-6
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.

-Refer to Table 3-6.Miguel has an absolute advantage in the production of

• A) both goods and a comparative advantage in the production of mixers.
• B) both goods and a comparative advantage in the production of toasters.
• C) neither good and a comparative advantage in the production of mixers.
• D) neither good and a comparative advantage in the production of toasters.

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Definitions:

Form 1116

Form 1116 is used by taxpayers to claim the Foreign Tax Credit, which is a credit for income taxes paid to a foreign country, reducing the U.S. tax liability on foreign income.

Foreign Tax Credit

A tax credit that allows taxpayers to offset income taxes paid to foreign governments against their U.S. tax liabilities, to avoid double taxation of the same income.

Earned Income Credit

The Earned Income Credit (EIC) is a refundable tax credit for low- to moderate-income working individuals and families, particularly those with children, to reduce poverty and encourage work.

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A tax credit that can only reduce a taxpayer’s liability to zero, but unlike refundable credits, any excess is not paid out to the taxpayer.