In the Real World, Specialization Is Rarely Complete Because

question 187

Multiple Choice

In the real world, specialization is rarely complete because

• A) nations normally experience increasing opportunity costs in producing more of the product in which they are specializing.
• B) production possibilities curves are straight lines rather than curves bowed outward as viewed from the origin.
• C) one nation's imports are necessarily another nation's exports.
• D) international law prohibits monopolies.

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Definitions:

Profitability Index

A financial metric used to evaluate the desirability of an investment, calculated as the present value of future cash flows divided by the initial investment.

Payback Period

The duration required for an investment to generate cash flows sufficient to recover its initial cost.

AAR

Average Annual Return, which measures the average return generated by an investment per year over a specified period.

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows.