The Theory of Comparative Advantage Is Based On

question 38

Multiple Choice

The theory of comparative advantage is based on:

• A)absolute opportunity costs.
• B)relative opportunity costs.
• C)total costs of production.
• D)total costs,including transportation costs.
• E)a comparison of marginal cost with average variable costs.

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Definitions:

Price Ceiling

A government-imposed limit on how high a price can be charged on a product, aiming to keep essential goods affordable.

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a given price over a specified period.

Quantity Supplied

The amount of a good that producers are willing and able to sell at a given price over a specified period.

Price Ceiling

A legal maximum price set by the government for certain goods or services, aimed at preventing prices from rising too high.