As the Result of Specialization and Trade, According to the Law

question 130

Multiple Choice

As the result of specialization and trade, according to the law of comparative advantage, total output will

• A) decline because specialization is costly.
• B) rise only when there is an accompanying decline in the total output of one's trading partners.
• C) rise if a nation is a net exporter and fall if the nation is a net importer of goods and services.
• D) increase since resources will be better directed toward their highest-valued use.

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Definitions:

Batch-Level Activity

Activities and costs incurred for a batch of products, rather than for each individual unit or the entire production process.

Product-Level Activity

Activities that are directly associated with a specific product, leading to costs that can be directly attributed to the production of that product.

Facility-Level Activity

Activities that support the entire organization and cannot be traced to individual products or services, such as building security and property taxes.

Activity Rate

The cost driver rate used in activity-based costing to allocate overhead costs to products or services based on specific activities.