A Country Has a Comparative Advantage

question 12

Multiple Choice

A country has a comparative advantage

• A)in producing milk if its cows are heavy milk producers.
• B)in producing mobile phones if it has a big timber industry.
• C)in producing those products or services that make intense use of those resources in which it has a relative abundance.
• D)in producing those products or services that make intense use of those resources for which it has the lowest domestic demand.

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Definitions:

Profits

The financial gain achieved when the revenues generated from business activities exceed the expenses, taxes, and costs incurred in operating the business.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.

Economic Profits

The excess of total revenue over total costs, including both explicit and implicit costs, reflecting the financial gain in terms of opportunity costs.

Price-Taker Market

A market situation in which the sellers or buyers have no control over the prices at which they buy or sell goods or services.