The Ease with Which an Asset Can Be Converted into Cash

question 147

Multiple Choice

The ease with which an asset can be converted into cash is referred to as its

• A) liquidity.
• B) profitability.
• C) solvency.
• D) convertibility.
• E) capitalization capacity.

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Definitions:

Law of Comparative Advantage

A principle that states that individuals, firms, regions, or nations can gain by specializing in the production of goods that they produce cheaply (at a low opportunity cost) and exchanging them for goods they cannot produce cheaply (at a high opportunity cost).

Labor-Intensive Commodities

Goods that require a higher proportion of labor in their production process compared to materials and capital.

Opportunity Cost

The value of the best alternative that must be forgone as a result of choosing a particular action or decision.

Law of Comparative Advantage

An economic principle stating that countries or individuals gain when they produce goods and services for which they have lower opportunity costs relative to others.