Use the Following Scenario to Answer the Next Eight Questions

question 61

Multiple Choice

Use the following scenario to answer the next eight questions:
Rosa and Dirk produce basketballs and footballs. Rosa can produce six basketballs per hour or two footballs per hour. Dirk can produce three basketballs per hour or four footballs per hour.
-Based on the scenario,which of the following is true?

• A) Rosa has a comparative advantage in producing basketballs but not footballs.
• B) Rosa has a comparative advantage in producing footballs but not basketballs.
• C) Rosa has a comparative advantage in producing both goods.
• D) Rosa has a comparative advantage in producing neither good.
• E) Rosa does not have any absolute advantage.

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Definitions:

Line of Credit

An arrangement between a financial institution and a customer that establishes a maximum loan balance that the borrower can access.

Maturity Matching Principle

A financial management strategy that involves matching the duration of assets with the duration of liabilities, to manage risk and ensure funding adequacy over time.

Project

A planned set of interrelated tasks to be executed over a fixed period and within certain cost and other limitations.

Self-Liquidating Loans

Loans that are structured to be paid off through the cash flow generated by the project or asset they finance.