How Do Countries Know When They Have a Comparative Advantage

question 111

Multiple Choice

How do countries know when they have a comparative advantage in the production of a good?

• A) Government accountants collect cost data from countries and analyze it to find out which country has a comparative advantage in the production of which good.
• B) They know as the result of individuals trying to earn profits and buying low and selling high in the process.
• C) The United Nations Economic Conference Group analyzes cost data from countries and determines which country has a comparative advantage in the production of which good.
• D) There is not one major way that countries acquire this information.

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Definitions:

Services Performed

Tasks or activities that are completed by a business or individual for compensation, often in the context of providing professional, maintenance, or consultancy services.

Cash Recorded

Cash recorded refers to the recording of cash transactions in the financial ledgers and accounts of a business, providing a trackable record of all cash movements.

Cash Payments Journal

A financial journal that tracks all cash outlays of a business, including expenses, asset purchases, and debt repayments.

Cash Purchase

This term refers to a transaction where goods or services are bought and paid for with cash or cash equivalent immediately at the point of sale.