Which Kind of State Is LEAST Likely to Benefit from Trade

question 62

Multiple Choice

Which kind of state is LEAST likely to benefit from trade?

• A)A state that has a comparative advantage at producing a few goods.
• B)A state that has a comparative advantage at producing one good.
• C)A state that has powerful business interests that produce goods that are more expensive than the global price.
• D)A state that has powerful business interests that produce goods that are cheaper than the global price.
• E)A state that can produce everything it wants to consume and does it more cheaply than the other alternatives.

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Definitions:

Product Costs

Costs that are directly incurred in the production of goods or services, including direct materials, direct labor, and manufacturing overhead.

Period Costs

Expenses that are not directly tied to production activities and are expensed in the period they are incurred, such as administrative salaries and marketing costs.

Variable Costs

Costs that vary directly with the level of production or volume of output, such as materials and labor directly involved in production.

Contribution Margin

The amount by which sales revenue exceeds variable costs, used to cover fixed costs and contribute to profit.