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.

---

Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits one misses out on.

Accounting Profits

The total revenue of a company minus the explicit costs, not including opportunity costs, showing the financial performance.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs.

Speeding Ticket

A penalty issued by law enforcement to a driver who is found to be exceeding the legal speed limit.