If a Country Possesses the Absolute Advantage in the Production

question 32

Multiple Choice

If a country possesses the absolute advantage in the production of one good:

• A) then it must also possess the absolute advantage in the production of the other good.
• B) then it must also possess the comparative advantage in the production of both goods.
• C) then it must also possess the comparative advantage in the production of the other good.
• D) it can produce more of that good given the same resources.

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Definitions:

Income Distribution

The way in which total income is divided among individuals or households in an economy.

Labor

The human effort, both physical and mental, used in the production of goods and services.

Capital

Economic resources or assets used in the production of goods and services, such as machinery, buildings, or tools.

Marginal Product

The additional output resulting from the use of one more unit of a production input, holding other inputs constant.