Despite Specialization and Comparative Advantage,household Production Still Exists Because for Some

question 73

Multiple Choice

Despite specialization and comparative advantage,household production still exists because for some households:

• A)the opportunity cost of production at home is greater than the cost of purchasing the good in the market.
• B)production at home is less costly than purchasing the good in the market.
• C)the value of home production exceeds the sunk cost of home production.
• D)the value of home production is ignored.
• E)the expenditure on food and clothing represents a small portion of their total budget.

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Definitions:

Quota Limits

Refers to government-imposed restrictions on the quantity or monetary value of goods that can be imported or exported over a specific period.

Market Equilibrium

A situation in which market supply equals market demand, and prices stabilize.

Demand Price

The highest price consumers are willing to pay for a good or service at a given quantity, reflecting the value placed on the item by the market.

Substitutes

Goods or services that can be used in place of each other, where an increase in the price of one leads to an increase in demand for the other.