The Fact That International Specialization and Trade Based on Comparative

question 26

Multiple Choice

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that

• A) the production possibilities curves of any two nations are identical.
• B) a nation's production possibilities and trading possibilities lines coincide.
• C) a nation's trading possibilities line lies to the right of its production possibilities line.
• D) a nation's production possibilities line lies to the right of its trading possibilities line.

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Definitions:

Equity Firm

A company that invests in businesses, typically by purchasing equity stakes, with the aim of earning returns through dividends or capital appreciation.

Shares Outstanding

The total number of shares of a company that are currently owned by shareholders, including both public investors and company officers or insiders.

Borrow

To receive something of value with the promise to return it or its equivalent value at a future date.

Unlevered Cost

The cost of funding a project without any debt, reflective of the project's risk as if financed entirely by equity.