Foreign Trade

question 19

Multiple Choice

Foreign trade:

• A) Increases the scarcity of resources.
• B) Makes a country more equitable.
• C) Allows a country to have a greater variety of products at a lower cost than if it tried to produce everything at home.
• D) Allows a country to avoid trade-offs.

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Definitions:

Profit Margin

A financial metric that measures the percentage of revenue remaining after all expenses have been deducted from sales.

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets financed by its shareholders' equity.

Absolute Advantage

A condition in which a country, company, or individual can produce a good or service at a lower cost per unit than competitors using the same amount of resources.

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.