Once a Country Has Lost Its Comparative Advantage in Producing

question 107

Multiple Choice

Once a country has lost its comparative advantage in producing a good, its income will be ________ and its economy will be ________ if it switches from producing the good to importing it.

• A)higher; less efficient
• B)higher; more efficient
• C)lower; less efficient
• D)lower; more efficient

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Definitions:

Break-Even

Break-even point is the level of production or sales at which total revenues equal total expenses, resulting in no net loss or gain.

Fixed Costs

Fixed costs are expenses that do not change with the level of production or sales, such as rent and salaries.

Variable Costs

Costs that vary in total in direct proportion to changes in the level of activity or volume of output produced.

Constraint

A limitation or restriction that affects an organization's ability to achieve its objectives, such as limited resources or time.