When One Producer Has a Comparative Advantage in Production,he or She

question 87

Multiple Choice

When one producer has a comparative advantage in production,he or she

• A) can produce more output than someone else using the same quantity of resources.
• B) can produce a good at a lower opportunity cost than someone else.
• C) does not benefit from trade with other producers.
• D) is unable to reach his or her production possibilities frontier (PPF).
• E) trades only with others who have the same comparative advantage.

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Definitions:

Fixed Costs

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance.

Discounted Cash Flow (DCF)

A valuation method used to estimate the value of an investment based on its future cash flows, adjusted for the time value of money.

Capital Budgeting Techniques

Methods used to evaluate and prioritize investment projects or expenditures, such as NPV, IRR, Payback Period, and Profitability Index.

Small Businesses

Enterprises characterized by a small number of employees, limited revenue, and size within their industry.