If a Producer Has a Comparative Advantage, Then She Has

question 221

Multiple Choice

If a producer has a comparative advantage, then she has selected the activity that

• A) has the lowest resource cost.
• B) is outside of the production possibilities frontier.
• C) has the lowest opportunity cost.
• D) does not require specialization.

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Definitions:

Expected Value

The expected value is a statistical concept that calculates the mean of all possible values of a random variable, weighted by their respective probabilities.

Stock Price

Stock price is the value of a company's shares traded on the stock market, representing investor's valuation of the company's future earnings potential.

Probability

An indicator of how probable an event is, represented as a numerical value ranging from 0 to 1.

Expected Present Value

Expected present value is a financial concept that calculates the current worth of a future sum of money or stream of cash flows given a specified rate of return.