The Law of Comparative Advantage Explains Why

question 102

Multiple Choice

The law of comparative advantage explains why

• A) specialization and exchange will make it possible for trading partners to expand their combined output.
• B) there will be an inverse relationship between the price of a product and the quantity of it that will be demanded.
• C) larger firms will have lower per unit costs than smaller firms.
• D) an increase in the price of a good will lead to an expansion in the quantity supplied by business firms.

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Definitions:

Economic Importance

The significance of a particular sector, industry, or commodity in contributing to the economic health and growth of a region, country, or global economy.

Fungi

A domain of organisms capable of producing spores that consume organic matter, which includes entities such as molds, yeast, different types of mushrooms, and toadstools.

Products

In a chemical reaction, substances that are formed as a result of the reaction.

Primary Mycelium

A mycelium in which the cells are monokaryotic and haploid; a mycelium that grows from either an ascospore or a basidiospore. Compare with secondary mycelium.