Which of the Following Statements About Absolute and Comparative Advantage

question 57

Multiple Choice

Which of the following statements about absolute and comparative advantage is not true?

• A) If a country has a comparative advantage at producing a good, it can have an absolute advantage at producing another good.
• B) If a country has an absolute advantage at producing a good, it can also have a comparative advantage at producing that good.
• C) A country may have an absolute advantage at producing all goods.
• D) A country may have a comparative advantage at producing all goods.

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Definitions:

Operating Divisions

Distinct segments within a company, each responsible for certain operations or business units.

Fixed Costs

Outlays that do not fluctuate with production or sales figures, such as office rent, salary payments, and insurance policies.

Return On Investment (ROI)

A performance measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the net profit from the investment by its original cost.

Residual Income

The income that remains after subtracting all required expenses, including a minimum target return, from operating income.