When Opportunity Costs Are Identical Between Two Countries for All

question 47

Multiple Choice

When opportunity costs are identical between two countries for all goods,

• A)international trade will be advantageous only to the country that has an absolute advantage in the production of some commodity.
• B)there will be gains from trade for both countries if one country has an absolute advantage in the production of some commodity.
• C)absolute advantages will determine the gains from trade.
• D)there can be no gains from trade unless there are economies of scale in some of the products.
• E)there will be absolute advantages from trade but no comparative advantages from trade.

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Definitions:

Fixed Assets

Tangible assets, such as property, plant, and equipment, used in the operating activities of a business and not intended for sale in the normal course of business.

Indirect Method

A way of calculating cash flows for the cash flow statement where net income is adjusted for changes in balance sheet accounts to reflect cash operations.

Statement of Cash Flows

A financial statement showing the cash inflows and outflows from operating, investing, and financing activities over a specific period.

Operating Activities

Day-to-day business functions and transactions related to a company's core business operations, such as sales and purchasing.