The Theory of Absolute Advantage Holds That There Are Advantages

question 57

True/False

The theory of absolute advantage holds that there are advantages to trade because different countries can produce different goods more efficiently than others.

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Definitions:

Variable Costs

Costs that change in proportion to the level of production or business activity, such as raw materials and labor expenses.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Profit

The difference between total revenue and total cost.

Yearly Return

The total gain or loss on an investment over a one-year period, expressed as a percentage of the investment’s initial cost.