The Theory of Comparative Advantage Illustrates That Specialization Can Lead

question 52

Multiple Choice

The theory of comparative advantage illustrates that specialization can lead to

• A) a rise in poverty among many groups of people.
• B) an increase in overall consumption and efficiency.
• C) greater equality among all people.
• D) the rise of powerful international organizations.

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life for accounting and tax purposes.

Net Working Capital

The gap between what a company owns in the short term (current assets) and what it owes (current liabilities), revealing its financial stability in the near term.

Operating Cash Flow

Operating cash flow is a measure of the cash generated by a company's regular business operations, indicating whether a company is able to generate sufficient positive cash flow to maintain and grow its operations.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating the short-term financial health of the company.