Consider a World with Two Countries and Two Goods

question 227

Multiple Choice

Consider a world with two countries and two goods. Under which of the following conditions does comparative advantage NOT exist?

• A) One country can produce both goods more cheaply than the other country.
• B) One country has more productive resources or inputs than another country.
• C) The opportunity cost of producing each good is the same in each country.
• D) One country has an absolute advantage in producing one good while the other country has an absolute advantage in producing the other good.

---

Definitions:

Voting Shares

Shares that give the shareholder voting rights in company decisions, typically one vote per share.

Consolidated Financial Statements

Combined financial reporting documents that present the overall financial status of a parent company and its subsidiaries as a single entity.

Voting Rights

The rights of shareholders to vote on company matters, such as electing directors or approving major corporate actions.

Consolidated Financial Statements

Financial statements that aggregate all the financial information of a parent company and its subsidiaries into one document.