Table 3-26 Assume That Japan and Korea Can Switch Between Producing Cars

question 271

Multiple Choice

Table 3-26
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
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-Refer to Table 3-26. Japan and Korea would not be able to gain from trade if Korea's opportunity cost of one car changed to

• A)1/5 airplane.
• B)1/3 airplane.
• C)3 airplanes.
• D)5 airplanes.

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Definitions:

Cost of Trade Credit

The cost associated with the terms of credit extended by suppliers, including discounts for early payment and penalties for late payment.

Paying Late

Paying late refers to the action of failing to meet the due date for a financial obligation, which can lead to late fees, interest charges, and negative impacts on credit scores.

Credit Terms

Statements of the credit period and any discounts offered—for example, 2/10, net 30.

Discount Period

The time interval between when a bill of exchange is issued and its payment date, during which the bill is sold at a discount from face value.