Can a Country Have a Comparative Advantage in Producing a Good

question 87

Multiple Choice

Can a country have a comparative advantage in producing a good without also having an absolute advantage in producing that good?

• A) No, it can't because comparative advantage grows out of absolute advantage.
• B) No, it can't because they are different terms for the same concept.
• C) Yes, it can because comparative advantage is based upon being able to produce more and absolute advantage is not.
• D) Yes, it can because each type of advantage has a different basis.

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Definitions:

Investment Tax Credit

A tax credit offered to entities to encourage investment in certain assets, offering a reduction in tax liability.

Total Assets Ratio

A financial metric comparing the total assets of a company to another financial measure, used to evaluate the company's financial health.

Tax Deductions

Expenses that can be deducted from adjusted gross income to reduce the amount of taxable income.

Off-Balance-Sheet Financing

Financial obligations not recorded on the balance sheet, often used to keep debt-to-equity ratios low.