In a Two-Nation, Two-Good World, Which of the Following Statements

question 172

Multiple Choice

In a two-nation, two-good world, which of the following statements is true?

• A) One nation cannot possibly have an absolute advantage over the other nation in both products.
• B) If one nation has the comparative advantage in one product, then the other nation would have the comparative advantage in the other product.
• C) One nation will always have the comparative advantage over the other nation in one of the products.
• D) If one nation has the absolute advantage in one product, then the other nation would have the absolute advantage in the other product.

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Definitions:

Percentage of Sales Approach

A financial forecasting method that estimates changes in balance sheet or income statement accounts as a fixed percentage of sales.

Pro Forma Statement

A financial statement based on hypothetical scenarios or assumptions, used to project future financial performance.

Maximum Capacity

The highest level of output that a company can sustain to produce in a given period under normal operating conditions.