A Country Will Be Able to Consume a Combination of Goods

question 44

Multiple Choice

A country will be able to consume a combination of goods that is not attainable solely from domestic production if

• A) the world terms of trade differ from its domestic relative costs.
• B) the country specializes in one product.
• C) the country avoids international trade.
• D) the world terms of trade equal the domestic relative costs.
• E) the country's domestic production value equals world relative value.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services.

Yards

A measurement unit equal to three feet or 0.9144 meters, often used in expressing lengths or distances.

Factory Overhead Cost Budget

A budget that estimates the cost for each item of factory overhead needed to support budgeted production.

Total Variable Cost

The sum of all costs that vary directly with the level of production, including materials and direct labor.