In a Two-Nation, Two-Good World, If Both Nations Have Identical

question 81

Multiple Choice

In a two-nation, two-good world, if both nations have identical production possibilities curves with constant costs, then one nation would have

• A) no comparative advantage over the other nation.
• B) a comparative advantage in one good and a comparative disadvantage in the other good.
• C) no absolute advantage over the other nation.
• D) an absolute advantage in one good and an absolute disadvantage in the other good.

---

Definitions:

Direct Method

A cash flow statement preparation method that shows the specific sources of operating cash receipts and payments.

Indirect Method

A financial reporting approach used in cash flow statements where net income is adjusted for non-cash transactions, depreciation, and changes in working capital to determine cash flow from operating activities.

Direct Method

A cash flow statement preparation approach that itemizes actual cash inflows and outflows from operating activities, as opposed to estimating them through indirect adjustments.

Expenses and Losses

Costs incurred in the operation of a business (expenses) and decreases in value not directly related to operations (losses).