According to the Principle of Comparative Advantage, Total Output and Consumption

question 62

Multiple Choice

According to the principle of comparative advantage, total output and consumption levels will be highest when goods are produced in nations according to which of the following conditions?

• A) Opportunity costs are lowest.
• B) Absolute advantages are highest.
• C) Opportunity costs are equal.
• D) Absolute advantages are lowest.

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Definitions:

Net Advantage

The benefit or gain that results from a specific course of action, minus any associated costs.

Resale Value

The estimated value for which an asset can be sold in the marketplace after some period of use.

Depreciation Tax Shield

A reduction in taxable income for firms, achieved through claiming depreciation expenses, thereby lowering the tax liability.

Corporate Tax Rate

The percentage of a corporation's taxable income that is paid as tax to the government, varying by country and sometimes within regions of a country.