The Law of Comparative Advantage Says That a Person Should

question 91

Multiple Choice

The law of comparative advantage says that a person should produce a good if he or she:

• A)has the greatest desire to consume that good.
• B)has the lowest opportunity cost of producing that good.
• C)has an absolute advantage in a related activity.
• D)has a comparative advantage in a related activity.
• E)is equally good at producing this good as someone else is.

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Definitions:

Multiple Lenders

A situation where a borrower has loans or credit lines from more than one lender at the same time.

Bond Financing

Raising capital through the issuance of bonds, which are debt securities that obligate the issuer to pay interest to holders and repay the principal at maturity.

Equity Financing

The method of raising capital by selling company shares to investors, thereby exchanging ownership rights for cash investments.

Tax Deductible

Tax Deductible refers to certain expenses that individuals or businesses can subtract from their gross income to reduce the amount of taxable income.