A Nation with Cheap, Efficient Communications Is Likely to Be

question 145

Multiple Choice

A nation with cheap, efficient communications is likely to be

• A) richer, ceteris paribus, because transaction costs will be lower and trade greater.
• B) richer only if production of goods is cheaper, too, since trade itself cannot create value.
• C) poorer since it spends so much on communication instead of true productivity.
• D) spending too much on communications, which adds nothing to the value of output.

---

Definitions:

Operating Income

Operating Income is the earnings before interest and taxes (EBIT) generated from a company's operational activities.

Income Tax Expense

The amount of money that a company is required to pay in taxes based on its taxable income.

Depreciation Expense

The method of allocating the cost of a tangible asset over its useful life, reflecting its decrease in value over time.

Operating Income

Earnings before interest and taxes (EBIT), calculated as gross profit minus all operating expenses, including depreciation and amortization.