How Is Absolute Advantage Found

question 158

Multiple Choice

How is absolute advantage found?

• A)By comparing opportunity costs.
• B)By calculating the dollar cost of production.
• C)By comparing the productivity of one nation to that of another.
• D)By first determining which country has a comparative advantage.

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Definitions:

Consolidated Accounts

Financial statements that represent the combined financial activities of a parent company and its subsidiaries.

Absorption Costing

A costing approach that encompasses all costs associated with production, namely direct materials, direct labor, and both variable and fixed overheads, in the product's final cost.

Variable Costing

An accounting method that only includes variable costs - costs that fluctuate with production volume - in the calculation of unit cost.

Fixed Costs

Expenses that do not change with the level of production or sales over a short period, such as rent or salaries.