What Occurs When a Person Possesses a Comparative Advantage in the Production

question 226

Multiple Choice

What occurs when a person possesses a comparative advantage in the production of one good or service?

• A) It promotes greater self-sufficiency.
• B) It permits gains from trade to be realized due to a more efficient use of resources.
• C) It discourages specialization.
• D) The person's opportunity cost becomes higher than for that of other goods.

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Definitions:

Cost Of Capital

The return rate that a company must earn on its investment projects to maintain its market value and attract funds.

Cost Of Labor

The total expense incurred by employers to compensate their workforce, including wages, salaries, benefits, and other related costs.

Slope

In mathematics, the slope is the measure of the steepness or the inclination of a line or a segment of a line connecting two points.

Isocost Line

In economics, a line that represents all combinations of a firm’s factors of production that have the same total cost.