The Simple Comparative Advantage Model Assumes Constant Returns to Specialization

question 15

Multiple Choice

The simple comparative advantage model assumes constant returns to specialization.However,it is more realistic to assume diminishing returns to specialization because of all of the following reasons except:

• A)all resources are of the same quality.
• B)different goods use resources in different proportions.
• C)as a country tries to increase its output of a certain good,it is more likely to draw on more marginal resources whose productivity is not as great as those initially employed.
• D)if a country specializes to the degree suggested by the simple Ricardian model,the gains from specialization are likely to be exhausted before specialization is complete.

Explain the concept of goal congruence and its importance in decentralized organizations.

Understand the significance of performance measures in management decision-making and strategic planning.

Discuss the benefits and challenges of a decentralized organization.

Identify the characteristics and functions of strategic business units within an organization.

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