If Canada Has a Comparative Advantage Relative to Mexico in the Production

question 14

Multiple Choice

If Canada has a comparative advantage relative to Mexico in the production of timber, then

• A) the explicit cost of production for timber is lower in Canada than in Mexico.
• B) the opportunity cost of production for timber is lower in Canada than in Mexico.
• C) the implicit costs of production for timber are lower in Canada than in Mexico.
• D) the average cost of production for timber is lower in Canada than in Mexico.

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Definitions:

Net Income

The total earnings of a company after deducting all expenses and taxes from revenue, indicating the company's profit.

Intercompany Profit

Profits that arise from transactions between companies under common control, which may need to be eliminated in consolidated financial statements.

Unrealized Profits

Gains on transactions that have occurred but have not yet been realized through the receipt or payment of cash.

Gross Margin

The difference between revenue and cost of goods sold, which indicates how much a company earns from its core operations.