The Basis for Free Trade Is the Concept of

question 1

Multiple Choice

The basis for free trade is the concept of

• A)absolute advantage.
• B)differences in natural resources and climate.
• C)differences in nominal wages.
• D)comparative advantage.

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Definitions:

Inefficient

A term describing processes or allocations of resources that do not maximize output or where inputs are not utilized in the best manner possible.

Marginal Cost

Marginal cost is the change in total cost that arises when the quantity produced is incremented by one unit.

Product-variety Externality

The impact on consumers and producers resulting from an increase or decrease in the variety of products available in the market.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay.