For What Reason Does Total Output in an Economy Increase

question 173

Multiple Choice

For what reason does total output in an economy increase when each person specializes?

• A)Because there is much less competition for the same resources.
• B)Because each person spends more time producing that product for which they have a comparative advantage.
• C)Because a wider variety of products can be produced with specialization.
• D)Because more people will be producing products than before.

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Definitions:

Production

The process of creating goods and services through the combination of labor, materials, and technology.

Direct Materials Cost

The cost of raw materials that can be directly traced to the production of goods, considered a variable cost in manufacturing.

Inventories

Assets held for sale, or in the process of being produced for sale, or to be used in the production process.

Overapplied Manufacturing Overhead

This occurs when the allocated manufacturing overhead cost is more than the actual manufacturing overhead costs incurred.