If a Country Produces a Commodity in the Range of Decreasing

question 22

Multiple Choice

If a country produces a commodity in the range of decreasing returns to scale, and the country begins to export more in a pure free trade system, the domestic price of the commodity will

• A)fall.
• B)rise.
• C)exceed the price in foreign countries.
• D)be below the price in foreign countries.
• E)One cannot predict the impact on the price of the commodity.

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Definitions:

Return on Common Stockholders' Equity

A financial ratio that measures the amount of net income returned as a percentage of shareholders' equity, indicating profitability.

Total Asset Turnover

A financial ratio that measures a company's ability to generate sales from its assets by comparing net sales with average total assets.

Inventory Turnover

A measure showing the frequency at which a company's stock is sold and replenished within a given timeframe.

Dividend Yield

A ratio indicating the annual dividends a company distributes in relation to its share price.