A Country Is Said to Have an Absolute Advantage in the Production

question 50

Multiple Choice

A country is said to have an absolute advantage in the production of a good when:

• A) its opportunity cost of producing the good is lower than another country.
• B) it can produce the good using less resources than another country.
• C) it specialises in the production of the good.
• D) its opportunity cost of producing the good is higher than another country.

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Definitions:

Total Risk

The complete spectrum of all types of risk that an investment or project could potentially face, including both systematic and unsystematic risks.

Expected Return

The expected return is the average return expected on an investment over a period.

Securities

Tradable financial instruments intended to provide returns to investors, which include equities, bonds, and options.

Portfolio

A collection of investments held by an individual or an institution, which may include stocks, bonds, and other assets.