According to the Law of Comparative Advantage, Both Individuals and Nations

question 224

Multiple Choice

According to the law of comparative advantage, both individuals and nations will be able to produce a larger joint output if each productive activity is undertaken by

• A) the high opportunity cost producer.
• B) the low opportunity cost producer.
• C) the producer who is able to hire workers at the lowest wage.
• D) the party that can complete the productive activity most rapidly.

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Definitions:

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity of that good consumers are willing to purchase at various prices.

Market Power

The ability of a firm or group of firms to influence or control the terms and conditions of a market, including prices.

Monopolistic Competition

A market structure characterized by many firms offering similar but not identical products, resulting in some degree of market power for each firm.

Differentiate Their Product

The strategy companies use to make their product or service stand out from competitors.