A Country Possesses a Comparative Advantage in the Production of a Product

question 21

Multiple Choice

A country possesses a comparative advantage in the production of a product if

• A)the opportunity cost, in terms of the amount of other products that it gives up to produce this product, is lower than it is for its trading partners.
• B)it possesses an absolute advantage in the production of this good compared to its trading partners.
• C)it is able to produce less of this good per worker than its trading partners.
• D)it can produce more of this good per hour than its trading partners.

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Definitions:

Planning Technique

A systematic method or approach used in preparing and executing plans or strategies to achieve desired objectives.

Household Savings

The portion of disposable income not spent on consumption of goods and services, often stored for future use or investment.

Firm Investment

The allocation of resources by a business towards assets, projects, or innovation intended to spur future growth or production.

Present Discounted Value

The value of a stream of future payments discounted at an interest rate.