If a bottle of fine French wine costs US$250 in the U.S., 2500 rand in South Africa, there are no transaction costs, and the exchange rate is 5 rand/US$, then
A) there is an arbitrage opportunity by buying the wine in the U.S., and selling it in South Africa and the price in South Africa will drop.
B) there is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will drop.
C) here is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will rise.
D) there is no arbitrage opportunity.
A
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Relative poverty refers to
A) how a family's income compares to the incomes of those around them. B) poverty levels at a stated income cutoff. C) the number of poor in one state relative to another. D) none of the above.
Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria. We can conclude that
A) Bulgaria also has an absolute advantage in producing sandals relative to Finland. B) Bulgaria has a lower opportunity cost of producing sandals relative to Finland. C) Finland has an absolute disadvantage in producing sandals relative to Bulgaria. D) Labor costs are higher for sandal producers in Finland than in Bulgaria.