Which of the Following Reasons Best Explains Why the United

question 50

Multiple Choice

Which of the following reasons best explains why the United States is a net exporter of farm crops?

• A) differences in resource endowments
• B) economies of scale
• C) differences in tastes
• D) import quotas
• E) import tariffs

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Definitions:

Differential Cost

Differential cost, or incremental cost, is the difference in total cost that will result from selecting one option over another in decision-making.

Relevant Costs

Relevant costs are those costs that should be considered when making decisions. They are directly affected by the decision in question and can include future costs that will differ among alternatives.

Fixed Manufacturing Expenses

Costs that do not vary with the volume of production, such as rent, depreciation of manufacturing equipment, and salaries of permanent factory staff.

Selling and Administrative Expenses

Expenses incurred from selling products or services and managing the business, excluding production costs.