Figure 1.1 -A Person Has a Comparative Advantage in Producing a Good

question 5

Multiple Choice

Figure 1.1

-A person has a comparative advantage in producing a good if that person

• A) can produce the good at a lower absolute cost than anyone else.
• B) can produce the good at a lower opportunity cost than anyone else.
• C) can do a better job than anyone else.
• D) spends less money in out-of-pocket expenses than anyone else.
• E) can produce the good at a higher opportunity cost than anyone else.

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Definitions:

Principal

The amount of money originally invested or loaned, on which basis interest and returns are calculated.

Agent

A party who has the authority to act on behalf of and bind another party.

Third-Party Beneficiary

A person who is not directly involved in a contract but is entitled to benefits from its performance by the contracting parties.

Gratuitous Agent

An agent who acts without being paid for his or her services.