The Difference Between Absolute and Comparative Advantages Is That Absolute

question 9

Multiple Choice

The difference between absolute and comparative advantages is that absolute advantage is relative to ________, while comparative advantage is relative to ________.

• A) other nations; activity inside the country
• B) similar industries; dissimilar industries
• C) similar products; dissimilar products
• D) activity inside the country; other nations
• E) dissimilar products; similar products

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Definitions:

Initial Endowment

The initial allocation of goods, resources, or money which an individual or entity possesses at the start of a consideration period.

Weak Axiom

A principle in consumer theory that, if a consumer chooses bundle A over bundle B when both are affordable, they will not choose B over A if A's price decreases and B's price stays the same or increases.

Revealed Preference

A theory that determines a consumer's preferences based on their purchasing behavior, under the assumption that their choices reveal their valuation of goods.

Insurance Agent

A professional who sells, solicits, or negotiates insurance policies on behalf of an insurer.