The Benefits to Specialization Are Enhanced When Two Trading Partners

question 4

Multiple Choice

The benefits to specialization are enhanced when two trading partners have:

• A) absolute advantages in producing the same goods.
• B) similar consumption preferences.
• C) very similar opportunity costs.
• D) large comparative advantages in different goods.

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Definitions:

Ordinary Loss

A loss incurred in the normal operation of a business, which can be used to reduce other taxable income on an owner's tax return.

Itemized Deductions

Expenses that taxpayers can subtract from their taxable income, detailed on Schedule A of the tax return.

AGI

Adjusted Gross Income, a measure of income calculated from your gross income and used to determine how much of your income is taxable.

Qualified Mortgage Interest

Interest paid on a mortgage that is eligible for tax deduction within the limits set by the IRS.