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iVinArrow [24]
3 years ago
13

For each watch that Switzerland produces, it gives up the opportunity to make 50 pounds of chocolate. Germany can produce 1 watc

h for every 100 pounds of chocolate it produces. Which of the following is true about the comparative advantage between the two countries?
A. Switzerland has the comparative advantage in chocolate.
B. Switzerland has the comparative advantage in watches.
C. Germany has the comparative advantage in watches and chocolate.
D. Germany has the comparative advantage in watches.
Business
1 answer:
chubhunter [2.5K]3 years ago
6 0

Answer:

B. Switzerland has the comparative advantage in watches.

Explanation:

Comparative Advantage is when an economy can produce a commodity with comparatively less opportunity cost in terms of other good sacrifised, than other economy.

It can also be denoted as an economy's more relative productivity in consumption, compared to other economy.

                       Watch         Chocolate

Switzerland       1                    50

Germany           1                    100

Switzerland can produce a watch by sacrifising lesser units of chocolate i.e 50,  than Germany - which sacrifises 100 watches chocolates for a watch production.

Switzerland is 0.02 (1/50) times productive in watch than chocolate. Germany is lesser i.e 0.01 (1/100) time productive in watch than chocolate. Also, Germany is more productive in chocolate than watch 100X > 50X.

So, Switzerland has comparative advantage in Watches & Germany in Chocolate.

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The shareholder's equity can be defined as the net value of a company. It basically is the amount that shareholders would receive if all the company's assets were liquidated and all of the company's debt also paid back. The shareholder's equity is usually found on the company's balance sheet and can be used as a financial measure to determine the company's financial status. The shareholder's equity is determined from subtracting the company's totals liabilities from its total assets. This can be expressed in the formula below;

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