When Does the Law of Comparative Advantage Say That a Person

question 107

Multiple Choice

When does the law of comparative advantage say that a person should produce a good?  

• A) if she has the greatest desire to consume that good 
• B) if she has the lowest opportunity cost of producing that good 
• C) if she has an absolute advantage in a related activity 
• D) if she has a comparative advantage in a related activity

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Definitions:

Compliance Costs

Expenses incurred by businesses or organizations in order to adhere to laws, regulations, and guidelines.

U.S. Income Tax

A tax imposed by the U.S. government on the income earned by individuals, corporations, trusts, and other legal entities.

Saving

The process of setting aside a portion of current income for future use or for investment purposes.

Consumption Tax

Taxes applied on spending on goods and services, such as sales tax or Value Added Tax (VAT).