The Principle of Comparative Advantage Indicates That Mutually Beneficial International

question 5

Multiple Choice

The principle of comparative advantage indicates that mutually beneficial international trade can take place only when

• A)tariffs are eliminated.
• B)transportation costs are almost zero.
• C)relative costs of production differ between nations.
• D)a country can produce more of some product than other nations can.

---

Definitions:

Net Income

The total profit of a company after all expenses, including taxes and operating expenses, are subtracted from total revenue.

Break-Even Point

The point at which the amount produced or sold results in total income matching total costs, leading to neither a profit nor a loss.

Net Loss

The amount by which expenses exceed revenues over a specific period, indicating a negative financial performance.

Target Profits

The specific amount of net income a company aims to achieve within a certain time frame.