The Key to Computing Comparative Advantage Is

question 173

Multiple Choice

The key to computing comparative advantage is

• A) calculating the value of the absolute advantage.
• B) a measurement of the opportunity cost.
• C) calculating the cost of production.
• D) computing consumer choice.

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Definitions:

Arithmetic Average

The simple mean calculated by adding a set of values and then dividing by the number of values.

Geometric Average

The nth root of the product of n numbers, used to calculate average rates of return over time for investments that undergo compounding.

Compounding

The process where an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time.

Effective Annual Rates

The interest rate on an investment or loan that considers the effects of compounding over a year.