If Country a Has a Comparative Advantage in the Production

question 12

Multiple Choice

If Country A has a comparative advantage in the production of good X relative to Country B,

• A)then Country A also has an absolute advantage in the production of this good.
• B)then Country A also has an absolute advantage in the production of some good other than X.
• C)then the opportunity cost of producing X in Country A is higher than in Country B.
• D)then the opportunity cost of producing X in Country A is lower than in Country B.
• E)We do not have enough information to say anything about relative opportunity costs.

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Definitions:

Operating Efficiency

A measure of how well a company utilizes its resources to generate profit without unnecessary waste.

Financial Ratios

Quantitative measures derived from a company's financial statements, used to evaluate its financial health, performance, and viability.

Financial Statements

Reports that summarize the financial performance and condition of a business, including the income statement, balance sheet, and cash flow statement.

Working Capital

The difference between a company's current assets and its current liabilities, indicating the liquidity available to run its operations.