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The Principle of Comparative Advantage States That, Regardless of the Price

question 45

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The principle of comparative advantage states that, regardless of the price at which trade takes place, everyone will benefit from trade if they specialize in the production of the good for which they have a comparative advantage.


Definitions:

Profit Margin

A financial metric used to assess a company's profitability by calculating the percentage of revenue that exceeds the costs of goods sold.

Retained Earnings

The portion of a company's profits not distributed as dividends but reinvested in the business.

Dividend Payout Ratio

The fraction of net earnings a firm pays to its shareholders as dividends, expressed as a percentage.

Profit Margin

A financial metric that measures the amount of net income earned with each dollar of sales generated by comparing the net income and the revenue of a company.

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