Following the Principle of Comparative Advantage, Specialization

question 14

Multiple Choice

Following the principle of comparative advantage, specialization:

• A) permits greater levels of total production than would be attained without it.
• B) increases the dependency of countries on trade.
• C) both of the above.
• D) neither of the above.

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Definitions:

Ratification

The principal’s approval of an unauthorized act performed by an agent or by one who has no authority to act as an agent. Also, an approval of a contract made by a minor after reaching maturity.

Contractual Obligation

A legal duty that arises out of a contract, requiring a party to either perform or refrain from performing certain acts.

Exculpatory Agreement

A clause that says one of the parties to a contract, generally the one who wrote the contract, is not liable for any economic loss or physical injury, even if that party caused the loss or injury.

Exculpatory Clause

A clause in a contract that releases a party from liability for his or her wrongful acts. These clauses are not favored by law.