Under Free Trade, Canada Would Not Enjoy Any Gains from Trade

question 135

Multiple Choice

Under free trade, Canada would not enjoy any gains from trade with Sweden if Canada

• A) trades at the Canadian rate of transformation.
• B) trades at Sweden's rate of transformation.
• C) specializes completely in the production of its export good.
• D) specializes partially in the production of its export good.

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Definitions:

Variable Costing

A bookkeeping procedure that adds only variable production fees (including direct materials, direct labor, and variable manufacturing overhead) into the costs associated with products.

Unit Product Cost

The total cost to produce a single unit of product, including direct materials, direct labor, and allocated overhead.

Direct Labor Cost

The expense of labor that can be directly attributed to the production of goods or services.

Net Operating Income

A company's revenue minus its operational direct and indirect costs, excluding taxes and interest.