Country a Has a Comparative Advantage Compared to Country B

question 149

Multiple Choice

Country A has a comparative advantage compared to Country B in the production of shoes if

• A) Country A can produce shoes at a lower monetary cost than Country B can.
• B) Country A can produce shoes using fewer resources than Country B can.
• C) the demand for shoes is higher in Country A than in Country B.
• D) Country A can produce shoes at a lower cost in terms of other goods than Country B can.

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Definitions:

Constant Cost

An economic scenario where the cost of producing an additional unit of a good or service remains unchanged, regardless of the scale of production.

Equilibrium Quantity

The quantity of goods supplied is equal to the quantity demanded at a given price level.

Equilibrium Price

The price at which the quantity of a good supplied equals the quantity demanded, resulting in no surplus or shortage in the market.

Zero Economic Profit

A situation where a firm's total revenues exactly equal its total costs, indicating no above-normal profit.