The Ability of One Country to Produce a Good or Service

question 41

Multiple Choice

The ability of one country to produce a good or service more efficiently than another is called a(n) _____.

• A) absolute advantage
• B) comparative advantage
• C) barter trade
• D) inorganic advantage
• E) equalization efficiency

---

Definitions:

Apples

A type of fruit that grows on apple trees, known for its sweet taste and the wide variety of types available.

Utility Function

A mathematical representation of how a consumer derives satisfaction or utility from consuming goods and services.

Substitution Effect

The economic principle that as prices rise (or incomes decrease), consumers will replace more expensive items with cheaper substitutes, holding utility constant.

Income

The amount of money received by an individual or household over a certain period, usually from employment or investments.