If Country a Has a Comparative Advantage in the Production

question 121

Multiple Choice

If Country A has a comparative advantage in the production of oil relative to Country B,then

• A)Country A also has an absolute advantage in producing oil.
• B)Country A also has an absolute advantage in producing some good other than oil.
• C)the opportunity cost of producing oil is higher in Country A than in Country B.
• D)the opportunity cost of producing oil is lower in Country A than in Country B.
• E)Country A when compared to Country B must have an absolute advantage in producing some good other than oil.

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Definitions:

Asset Beta

A measure of the systematic risk of a firm's assets, used in the Capital Asset Pricing Model (CAPM) to determine the expected return of the asset.

Market Rate

Market rate, in economics, refers to the prevailing price of goods, services, or labor in a competitive market, determined by supply and demand dynamics.

Risk-Free Rate

The theoretical return on an investment with no risk of financial loss, often represented by the yield on government securities.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision.