When Each Person Specializes in Producing the Good for Which

question 176

True/False

When each person specializes in producing the good for which he or she has a comparative advantage, each person can gain from trade but total production in the economy is unchanged.

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Definitions:

Variable Costs

Costs that vary in total directly and proportionately with changes in the activity level or volume, such as materials and labor.

Variable Cost

Expenditures that fluctuate in accordance with production or sales figures, including costs for materials and workforce.

Fixed Costs

Expenses that do not change in relation to production volume or business activity level, such as rent or salaries.