When Two Countries Are Specializing and Trading with Each Other

question 9

Multiple Choice

When two countries are specializing and trading with each other, the gains from trade will tend to be greater when

• A)there are economies of scale in production.
• B)prices rise in both countries.
• C)the production possibilities boundaries shift inward.
• D)opportunity costs in the two countries are similar.
• E)comparative advantages are eliminated.

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Definitions:

Volume Variance

The difference between the planned volume of production or sales and the actual volume, which can affect costs and revenue.

Overhead

Indirect costs associated with running a business that can't be directly attributed to a specific product or service, such as utilities and rent.

Standard Costs

Predetermined costs for materials, labor, and overhead used as benchmarks in budgeting and performance evaluation.

Anticipated Costs

Estimated costs expected to be incurred in the future for a project, activity, or operation.