If Canada Has an Absolute Advantage in the Production of Oil

question 108

Multiple Choice

If Canada has an absolute advantage in the production of oil relative to the United States,then

• A)Canada also has a comparative advantage in producing oil.
• B)Canada also has a comparative advantage in producing some good other than oil.
• C)the opportunity cost of producing oil is higher in Canada than in the United States.
• D)the opportunity cost of producing oil is lower in Canada than in the United States.
• E)Canada may or may not have a comparative advantage in producing oil relative to the United States.

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Definitions:

Marginal Revenue

The additional earnings obtained from the sale of one extra unit of a product or service.

Average Total Cost

The total cost of production divided by the number of units produced, representing the average cost per unit.

Average Variable Cost

The sum of all costs that vary with output levels, when divided by the total output produced.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good that consumers are willing to purchase at various prices.