A Nation's Comparative Advantage in the Production of an Item

question 94

Multiple Choice

A nation's comparative advantage in the production of an item is determined by:

• A) which country has already specialized in the production of the item.
• B) the total and marginal costs of producing the item.
• C) the opportunity cost of producing the item relative to a trading partner's opportunity cost.
• D) wage rates and other input costs.

---

Definitions:

Net Present Value Method

A financial modeling technique that evaluates the profitability of an investment by discounting future cash flows to their present value and subtracting the initial investment.

Cash Flows

The total amount of money being transferred into and out of a business, often analyzed to assess the financial health of an organization.

Annual Return

The percentage of profit or loss on an investment over a one-year period.

Payback Period

The duration of time it takes to recoup the initial investment cost of a project or investment, through cash inflows or savings.