The Theory of Comparative Advantage Suggests

question 76

Multiple Choice

The theory of comparative advantage suggests:

• A) that an industrialised country should not import.
• B) that a country that is not competitive should import everything.
• C) that a country specialises according to the opportunity cost.
• D) that a country specialises according to the absolute cost.

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Definitions:

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production based on a certain activity base.

Variable Component

The part of a cost or expense that varies directly with the level of activity or production volume, in contrast to fixed costs.

Electrical Motor

An electromechanical device that converts electrical energy into mechanical energy, commonly used in various appliances, machinery, and vehicles.

Labor-Hour

A unit of measure representing an hour of work performed by an employee.