According to David Ricardo's Principle of Comparative Advantage, the Gains

question 17

Multiple Choice

According to David Ricardo's principle of comparative advantage, the gains from international trade can be reaped

• A)only by developed countries.
• B)only by a country with an absolute advantage in the production of some commodity.
• C)by any country with opportunity costs different from other countries.
• D)by any trading country with opportunity costs similar to other countries.
• E)by only one country if opportunity costs are identical across countries.

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Definitions:

Capital Structure

This term describes the mix of debt and equity that a company uses to finance its operations and growth.

Debt

An amount of money borrowed by one party from another, under the condition it will be paid back with interest, often used for investments, operations, or purchases.

Equity

The value of an ownership interest in a company, representing shareholders' stake after debts and liabilities have been settled.

Capital Budgeting

The process that a business uses to evaluate potential major investment or expenditure projects, using various techniques to determine their value.