Use the Following Scenario to Answer the Next Two Questions

question 79

Multiple Choice

Use the following scenario to answer the next two questions:
Suppose that Canada, an industrialized nation, and Mexico, a developing nation, both produce clothes and cars. The real wage in Mexico is lower than in Canada. The countries have a free trade agreement. Each nation will find a comparative advantage.
-A has a comparative advantage over B in producing a good if:

• A) A can produce more of the good than B can in a given time period.
• B) A has to trade off more than B does to produce the good.
• C) A has a lower opportunity cost of producing the good than does B.
• D) A has a higher opportunity cost of producing the good than does B.
• E) B can produce more of the good than A can in a given time period.

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Definitions:

Reporting Principles

The foundational guidelines that govern the preparation and presentation of financial reports, ensuring accuracy, consistency, and transparency.

Historical Cost Principle

An accounting principle that requires financial statements to be based on the original cost of an asset, rather than its current market value.

Consistency Principle

An accounting principle that requires entities to apply the same accounting methods and policies from period to period unless a change is justified and disclosed.

Accounting Methods

The specific rules and procedures used by a business to prepare its financial statements, including how it recognizes revenue and expenses.