A Country That Has an Absolute Advantage in Producing All

question 209

Multiple Choice

A country that has an absolute advantage in producing all goods will

• A) have a comparative advantage in some goods but not all.
• B) produce all goods at lowest opportunity cost.
• C) have a comparative advantage in all goods.
• D) not gain from specialization and trade.

---

Definitions:

Expected Rate

The rate of return that an investor anticipates earning on an investment without taking into account inflation or other factors that could affect the actual yield.

Liquidity Spreads

The difference in yield or cost between liquid (easily convertible to cash) assets and illiquid assets, often indicative of the liquidity premium required by investors.

Security A

A generic term used to represent a particular stock or financial instrument in theoretical examples.

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher volatility, and less than 1 indicates lower volatility.