Many Developing Countries Have a Potential Comparative Advantage in Manufacturing

question 5

Multiple Choice

Many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with well-established industries in developed countries. This demonstrates the

• A) economic development argument.
• B) comparative advantage theory.
• C) national security argument.
• D) infant industry argument.
• E) mixed economy theory.

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Definitions:

Partial Equity Method

An accounting technique used for investments, where the investment is recorded at cost and adjusted for the investor's share of the investee's income, losses, and dividends.

Excess Consideration

The amount paid over the fair value of net assets during an acquisition, often recorded as goodwill on the balance sheet.

Equipment Undervalued

A situation in which the book value of equipment is recorded at less than its fair market value.

Partial Equity Method

A method of accounting for investments where the investor recognizes its share of the profits and losses of the investee, to the extent of its initial investment, in its financial statements.