If One Country Is Twice the Size of Another Country

question 85

Multiple Choice

If one country is twice the size of another country and is better at making almost everything than the benighted citizens of the smaller county,

• A)the bigger country enjoys an absolute advantage.
• B)the bigger country enjoys a relative advantage.
• C)the bigger country enjoys a comparative advantage.
• D)there is not enough information to make a determination.

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Definitions:

Finished Goods Inventory

Products that have completed the manufacturing process and are ready to be sold.

Absorption Costing

An accounting method that includes all manufacturing costs, both direct and indirect, in the cost of a product.

Throughput Costing

An accounting method emphasizing the costs directly associated with producing goods, excluding indirect costs like manufacturing overhead.

Variable Costing

A costing method in which variable manufacturing costs are treated as product costs while fixed manufacturing overheads are treated as period costs.