A Country That Has an Absolute Advantage in Producing All

question 86

Multiple Choice

A country that has an absolute advantage in producing all goods will .

• A) produce all goods at lowest opportunity cost
• B) have a comparative advantage in all goods
• C) have a comparative advantage in some goods but not all
• D) not gain from specialization and trade

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Definitions:

Risk-Free Asset

An asset which is assumed to have no risk of financial loss and typically refers to government bonds or bills.

Risky Portfolio

A risky portfolio comprises investments that have a higher degree of risk, aiming for potentially higher rewards but with an increased possibility of losses.

Arithmetic Average

The sum of a series of numbers divided by the count of that series of numbers, commonly used to calculate the mean value of datasets.

Geometric Average

A method of calculating the average rate of return of a set of values by multiplying them together and taking the nth root, where n is the number of values, typically used for investment growth rates.