When a Producer Has the Ability to Produce a Good

question 136

Multiple Choice

When a producer has the ability to produce a good or service at a lower opportunity cost than others, economists say the producer:

• A) has an absolute advantage at producing that good.
• B) has a comparative advantage at producing that good.
• C) has no reason to trade with others.
• D) is efficient in production.

---

Definitions:

Break-Even Point

The production level or sales volume at which total revenues equal total expenses, resulting in neither profit nor loss.

Variable Costs

Costs that change in proportion to the level of production or sales activities, such as materials and labor.

Utilization

The extent to which a resource, such as equipment or labor, is used for its intended purpose, often expressed as a percentage.

Efficiency

The ratio of the useful output to the total input in any system, reflecting how well resources are utilized without waste.