According to Adam Smith's Theory of Absolute Advantage, Specialization Allows

question 55

Multiple Choice

According to Adam Smith's theory of absolute advantage, specialization allows countries to increase their efficiency for each of the following reasons EXCEPT ________.

• A)labor could become more skilled by repeating the same tasks
• B)transportation costs could be lowered by producing closer to markets
• C)labor would not lose time in switching from the production of one kind of product to another
• D)higher production would provide incentives for the development of more effective working methods

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Definitions:

Merchandiser

A business entity engaged in selling goods directly to consumers or other businesses.

Cost Flow

The manner in which costs move through a firm, from initial acquisition of raw materials to final sale of finished goods.

Single-Step Income Statement

An income statement format that lists all revenues and then deducts all expenses to find the net income with only one subtraction.

Multiple-Step Income Statement

A detailed income statement that separates operational revenue and expenses from non-operational ones, presenting a clear view of a company’s operational efficiency.