A Person Has a Comparative Advantage in Producing a Good

question 22

Multiple Choice

A person has a comparative advantage in producing a good if:

• A)that person can produce the good at a lower absolute cost than anyone else.
• B)that person can produce the good at a lower opportunity cost than anyone else.
• C)that person can do a better job than anyone else.
• D)that person spends less money in out-of-pocket expenses than anybody else.
• E)that person can produce the good at a higher opportunity cost than anyone else.

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Definitions:

Catch-Up Effect

The theory that poorer economies will tend to grow at faster rates than wealthier ones, allowing them to catch up in terms of income and other economic measures.

Capital

Refers to assets or resources that businesses or individuals use to generate wealth through investment.

Saving Rates

The proportion of disposable income that individuals or an economy as a whole save rather than spend on consumption.

Income Growth

An increase in the amount of money earned by individuals or households over time.