A Country Has a Comparative Advantage in the Production of a Good

question 263

Multiple Choice

A country has a comparative advantage in the production of a good if it can

• A) produce more of the good than another country.
• B) produce more of the good most efficiently.
• C) produce the good on and remain on its production possibilities frontier.
• D) tradeoff producing the good for another good.
• E) produce the good at the lowest opportunity cost.

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Definitions:

Utilization

The extent to which a resource, such as equipment, space, or labor, is being used effectively and efficiently.

Excess Capacity

The situation in which a company can produce more products or services than currently demanded by the market.

High Fixed Costs

A financial condition where a business or operation has a high proportion of expenses that do not vary with the volume of production or sales.

Low Variable Costs

Operating conditions where costs that vary with production levels, like materials and labor, are minimal.