Author Question: Two countries, Blue Violet and Orange Rose, produce only two goods: teapots and coffeepots. The ... (Read 72 times)

dejastew · **on:** Jun 29, 2018

Two countries, Blue Violet and Orange Rose, produce only two goods: teapots and coffeepots. The table above gives their production possibilities. ________ has a comparative advantage in teapots and ________ has a comparative advantage in coffeepots.

A) Orange Rose; Blue Violet
B) Blue Violet; Orange Rose
C) Blue Violet; Blue Violet
D) Orange Rose; Orange Rose

Question 2

A sum of 10,000 is deposited in a bank. Consider two situations: the bank offers an annual rate of interest of 10 and the bank offers an annual rate of interest of 15. Compare the time value of money generated in both cases after:

a) one year.
b) five years.

Brummell1998 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

B

Answer to Question 2

a) At a rate of interest of 10 per annum, future value of 10,000 after a year is: 11,000. Hence, time value of money is: 11,000 - 10,000 = 1,000.
At a rate of interest of 15 per annum, future value of 10,000 after a year is: 11,500. Hence, time value of money is: 11,500 - 10,000 = 1,500.

b) At a rate of interest of 10 per annum, future value of 10,000 after five years is: 16,105.1. Hence, time value of money is: 16,105.1 - 10,000 = 6,105.1.
At a rate of interest of 15 per annum, future value of 10,000 after five years is: 20,113.57. Hence, time value of money is: 20,113.57 - 10,000 = 10,113.57.