Asked by Eribel Almonte on May 01, 2024
Verified
Answer the question using the accompanying cost ratios for two products, fish (F) and chicken (C) , in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and that these are the only two nations in the world.Singsong: 1F = 2CHarmony: 1F = 4CIn Singsong the domestic real cost of each chicken
A) is ½ fish.
B) is 2 fish.
C) increases with the level of fish caught.
D) decreases with the level of fish caught.
Cost Ratios
These ratios compare different types of costs to each other or to sales in order to evaluate a company's financial efficiency and profitability.
Constant Costs
Costs that do not change in total with the level of activity or production volume, within a certain range of activity or period of time.
Domestic Real Cost
The actual economic cost of production or acquisition, factoring in domestic purchasing power and excluding the effects of inflation.
- Acquire knowledge and utilize the idea of opportunity costs when dealing with international trade scenarios.
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Learning Objectives
- Acquire knowledge and utilize the idea of opportunity costs when dealing with international trade scenarios.
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