The Theory That Suggests Specialization by Country Can Increase Worldwide

question 15

Multiple Choice

The theory that suggests specialization by country can increase worldwide production is:

• A) the theory of comparative advantage.
• B) the theory of foreign direct investment.
• C) the international Fisher effect.
• D) the theory of working capital management.

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Definitions:

Marginal Cost

The additional cost incurred in the production of one extra unit of a good or service.

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced; these costs decline as production increases.

Marginal Cost

The financial cost of producing an extra unit of a good or service.

Average Total Cost

The total cost of production divided by the quantity of output produced.