When Iceland Can Generate a Product Using Fewer Labor Hours

question 148

Multiple Choice

When Iceland can generate a product using fewer labor hours and resources than the United States, an economist would say that Iceland had

• A) a comparative advantage in production of the product.
• B) an absolute advantage in production of the product.
• C) a higher opportunity cost of producing the product.
• D) no incentive to import the product, regardless of the cost-price conditions for other products.

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Definitions:

Bounce Back

The ability to recover from setbacks or difficulties; resilience.

Inverted-U Hypothesis

A theory suggesting that performance increases with physiological or mental arousal, but only up to a point, after which performance begins to decrease.

Level of Arousal

The degree of alertness, wakefulness, or responsiveness of an organism.

Performance

The act of carrying out a task, the effectiveness of which can be measured in terms of quality, speed, and efficiency.