Which of These Countries Demonstrates Jeffrey Sachs's Argument About Trade

question 10

Multiple Choice

Which of these countries demonstrates Jeffrey Sachs's argument about trade?

• A) The nation of Ilar exports rice but imports wheat because it is more cost effective.
• B) The soil conditions in Sarut are so poor that no crops can be grown and the country must import all food sources.
• C) Intellectual property rights are well-protected in the nation of Acher which provides an absolute advantage.
• D) The citizens of Rener fail to participate in entrepreneurial activity because of the planned economy.
• E) The true GNI of the nation of Wolcott is unknown because of the "hidden economy."

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Definitions:

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales revenue.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted; a measure of profitability.

Total Cost of Goods Sold

The sum of all costs directly involved in producing or purchasing products sold by a company during a given period.

High-low Method

A technique used to estimate fixed and variable components of costs by analyzing the highest and lowest levels of activity.