Trade Between Two Countries Can Benefit Both Countries If

question 22

Multiple Choice

Trade between two countries can benefit both countries if

• A)each country has a more elastic supply for the exported goods.
• B)each country produces a wide range of goods for export.
• C)each country exports that good in which it has a comparative advantage.
• D)each country enjoys superior terms of trade.
• E)each country has a more elastic demand for the imported goods.

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Definitions:

Markup

The difference between the cost of a good or service and its selling price, expressed as a percentage of the cost.

Cost-Plus Approach

A pricing strategy where a fixed percentage is added to the production cost to determine the sale price of a product.

Bottleneck

A stage in a process that reduces the overall capacity because it runs at the slowest speed.

Contribution Margin

The excess of sales over variable costs.