If Two Nations Want to Trade with One Another,they Can

question 125

Multiple Choice

If two nations want to trade with one another,they can determine their respective comparative advantages by

• A)hiring economists to gather and interpret the relevant data.
• B)first determining which has absolute advantage in the production of goods and services.
• C)allowing firms in each country to freely engage in international trade.
• D)making certain that the prices of tradable goods and services are equal in both nations.
• E)computing the opportunity costs of all goods and services.

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Definitions:

Activity-Based Costing

A method of costing that identifies the relationship between costs, activities, and products, and through this relationship, assigns indirect costs to products less arbitrarily than traditional methods.

Processing Costs

The expenses involved in handling, treating, or converting raw materials into finished products.

Equipment Expense

The cost associated with purchasing or maintaining equipment necessary for the operation of a business.

Activity Rate

A ratio used in activity-based costing to allocate costs to products or services based on the number of transactions or events.