The Principle of Comparative Advantage

question 25

Multiple Choice

The principle of comparative advantage

• A)applies only when the gold standard is in effect.
• B)is the basic reason that the United States has been running trade deficits.
• C)states that it is advantageous to export more than you import.
• D)states that total output is greatest when each product is made by the country that has the lowest opportunity cost.

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Definitions:

American Stores

historically refers to a chain of supermarkets and drugstores in the United States, illustrating an example of retail business operation.

Diffusion

The spread of cultural elements, ideas, technologies, or innovations from one area or social group to another.

Invention/Innovation

Occurs when existing cultural items are manipulated or modified to produce something new and socially valuable.

Discovery

The act of finding something unknown or unrecognized by others, often leading to new knowledge or understanding.