If a Nation Has "Cheap" Labor

question 57

Multiple Choice

If a nation has "cheap" labor,

• A)​it can still benefit from trade.
• B)​it is unlikely to have a comparative advantage in the production of goods that are highly capital intensive.
• C)​it cannot have a comparative advantage in everything.
• D)​all of the above are true.

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Definitions:

AVC Curve

The graphical representation of the average variable cost per unit of output over various levels of production.

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good changes as production volume changes.

Perfect Competition

Perfect competition describes a market structure where many firms sell identical products, no single buyer or seller can influence the market price, and there is free entry and exit of firms.

Firm Profits

The financial gains a company makes after deducting all its expenses.