The United States Has an Absolute Advantage in Producing T-Shirts,but

question 113

Multiple Choice

The United States has an absolute advantage in producing T-shirts,but not a comparative advantage,because

• A)Another country may have an absolute advantage in producing T-shirts.
• B)The United States uses fewer resources to produce T-shirts than another country can
• C)Other countries,such as China,can produce T-shirts at a lower opportunity cost relative to the United States.
• D)Labor costs in the production of T-shirts are lower in the United States than in other countries.

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Definitions:

Minimum Required Rate

The lowest acceptable rate of return on an investment, as determined by management or investors.

Residual Income

The amount of income that an individual or company retains after accounting for all operating expenses and cost of capital.

Operating Assets

Assets that are used by a company in its daily operations to generate revenue, excluding any investment or non-operational assets.

Net Operating Income

The profit derived from a company's regular business activities, excluding deductions of interest and taxes.