Which of the Following Statements Is True

question 118

Multiple Choice

Which of the following statements is true?

• A) Free trade theory suggests that when trade takes place any gains made by one nation comes at the expense of another.
• B) If a hairdresser has a comparative advantage over the cleaner, she should do both: cutting hair and cleaning.
• C) According to the theory of comparative advantage, a nation should specialise in the production of those goods for which it has an absolute advantage.
• D) Specialisation allows nations to trade the surplus of their production.

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Definitions:

M. Sims Capital

An account representing the owner’s equity or the funds contributed by and belonging to the owner of a company.

Income Summary

An account used in the closing process that aggregates all income and expense accounts to determine the net profit or loss.

Net Income

The total profit of a business after all expenses and taxes have been deducted from total revenue.