Comparative Advantage Means the Ability to Produce a Good or Service

question 103

Multiple Choice

Comparative advantage means the ability to produce a good or service

• A)at a lower selling price than any other producer.
• B)at a lower opportunity cost than any other producer.
• C)of a higher quality than any other producer.
• D)at a higher profit level than any other producer.

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Definitions:

Marginal Costs

The cost added by producing one additional unit of a product or service.

Net Present Value

A calculation used to assess the value of future cash flows in today's dollars, considering the time value of money.

Cost of Capital

The cost of funds used for financing a business, typically expressed as an annual percentage, including the cost of equity and debt.

Cash Flows

The total amount of money being transferred into and out of a business, indicating its financial health.