According to the Principle of Comparative Advantage

question 14

Multiple Choice

According to the principle of comparative advantage,

• A) a country will benefit by specializing in the production of goods in which it has a relatively low opportunity cost.
• B) a country will benefit by specializing in the production of goods in which it has a relatively high opportunity cost.
• C) a country will benefit by importing goods in which it has a relatively low opportunity cost.
• D) a country will benefit by becoming economically self-sufficient.

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Definitions:

Activity-based Costing

A method in costing that allocates overhead and indirect costs to specific activities, providing a more accurate representation of the cost to produce a product or service.

ABC Costing

Activity-based costing; a method of allocating overhead and direct costs to specific products or activities based on actual consumption.

Cost Information

Data about the expenses involved in producing goods or services, used for budgeting, pricing, and financial analysis.

Cost Drivers

Factors that cause a change in the cost of an activity or production, such as labor hours or machine usage.