When a Country Has the Ability to Produce More of a Good

question 130

Multiple Choice

When a country has the ability to produce more of a good than others with a given amount of resources,they:

• A) have an absolute advantage.
• B) have a comparative advantage.
• C) are free-traders.
• D) should remain self-sufficient.

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Definitions:

ATC

Average Total Costs, which is the sum of all production costs (fixed and variable) divided by the quantity of output produced, detailing the average cost per unit of output.

Economic Conditions

The state of an economy at a given time, encompassing factors such as inflation, unemployment rates, and GDP growth.

Decreasing-Cost Industry

An industry where average costs of production decrease as the industry grows and output increases, due to factors like technology improvements or economies of scale.

Entry

The act of entering or joining a particular market or area of business, often considered in terms of barriers that might exist to hinder new competitors.