Which of the Following Statements Is True

question 1

Multiple Choice

Which of the following statements is true?

• A) Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it.
• B) Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner.
• C) Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product.
• D) Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product.

---

Definitions:

Prices Fall

A market condition where the cost of goods and services decreases over time.

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used in economics to isolate the effect of one variable on another by holding all other relevant factors constant in an analytical context.

Law Of Demand

The economic principle that states there is an inverse relationship between the price of a good or service and the quantity demanded, ceteris paribus.

Entertainment Tax

A tax imposed on services related to entertainment, such as movie tickets, shows, and sporting events, typically to raise revenue for local or national governments.