A Person Has a Comparative Advantage in an Activity Whenever

question 204

Multiple Choice

A person has a comparative advantage in an activity whenever she

• A) has an absolute advantage in the activity.
• B) can perform the activity at a lower opportunity cost than another person can.
• C) can do the activity in less time than anyone else.
• D) can do everything better than anyone else.

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Definitions:

Transfer Price

The price charged for goods and services transferred between departments or divisions of the same company or between related entities.

Buying Division

A department within a company responsible for purchasing goods, materials, and services required for the business operations.

Negotiated Transfer Price

A transfer price agreed upon by the selling and buying divisions within the same company.

External Market Price

The price at which goods or services are bought and sold outside of a company, determined by the supply and demand in the wider market.