Even in a Situation Where Absolute Costs for Two Countries

question 28

Multiple Choice

Even in a situation where absolute costs for two countries and two products are identical, trade can be mutually beneficial if:

• A)tastes differ substantially between the two countries.
• B)economies of scale in the production of both products encourages specialization.
• C)a third product is introduced and paired with one of the former products.
• D)answers a.and b.
• E)none of the above.

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Definitions:

Warranty Repairs

Services offered by manufacturers or retailers to repair, replace, or rectify defects in products within a specified period after purchase, at no cost to the customer.

Internal Failure Cost

Costs associated with defects found before the product is delivered to the customer, including scrap and rework.

Quality Cost Report

A document that outlines the costs associated with preventing, detecting, and correcting defective work, categorized into prevention costs, appraisal costs, and failure costs.

Rework Labor

The labor required to correct defective products or errors in production, not initially planned for in the manufacturing process.