Which of the Following Is an Assumption Made by the Comparative

question 24

Multiple Choice

Which of the following is an assumption made by the comparative advantage theory?

• A) maximization of production and consumption
• B) government interference and control in trade activities
• C) creation of trade deficits
• D) creation of trade surpluses

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Definitions:

Implicit Costs

The opportunity costs that arise from using assets, resources, or funds to undertake an action instead of another activity, not directly recorded in financial statements.

Explicit Costs

Direct monetary expenses incurred in the course of doing business, such as wages, rent, and materials.

Peak Efficiency

The optimal point at which a particular process or system operates with maximum effectiveness or efficiency.

MC = MR

The point where Marginal Cost equals Marginal Revenue, considered the optimal point of production for maximum profit.