According to the Theory of Comparative Advantage, Mutually Advantageous International

question 31

Multiple Choice

According to the theory of comparative advantage, mutually advantageous international trade is based on differences in

• A) the absolute abundance of natural resources.
• B) the relative cost of producing a good in different countries.
• C) which good a particular nation can produce at the lowest cost.
• D) the effective use of trade barriers and export subsidies.

---

Definitions:

Cost Principle

An accounting principle that requires assets, liabilities, equity, and expenses to be recorded at their original cost.

Market Value

The market's current rate for transactions involving the purchase or sale of an asset or service.

Appraisal

The process of professionally estimating the value of a property, often used for taxation or sale purposes.

Purchase Price

The amount of money paid to buy a product or service, including any additional charges.