Reference: Ref 2-8 (Table: Production in the United States and Germany)

question 116

Multiple Choice

Reference: Ref 2-8 (Table: Production in the United States and Germany) According to the table, which of the following statements is true?

• A) The United States has a comparative advantage in clocks.
• B) Germany has an absolute advantage in clocks and sofas.
• C) The United States has a comparative advantage in sofas.
• D) The United States has a comparative advantage in clocks and sofas.

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Definitions:

Price Effect

The impact on the market when there is a change in the price of goods or services, influencing the supply and demand.

Output Effect

The change in total revenue resulting from the production of additional units of output in a competitive market.

Jointly Maximize

A strategy or action designed to optimize two or more objectives or outcomes at the same time.

Marginal Cost

The cost added by producing one extra unit of a product or service.