A Nation Has a Comparative Advantage Over a Trading Partner

question 50

Multiple Choice

A nation has a comparative advantage over a trading partner in the production of good A if it

• A)produces good A at a lower opportunity cost per unit than its trading partner.
• B)can produce good A with the same resources as its trading partner but in less time.
• C)can match its trading partner's output of good A and have resources left over.
• D)has an absolute advantage over its trading partner.
• E)produces good A with fewer material inputs than its trading partner.

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Definitions:

Salvage Value

The estimated residual value of an asset at the end of its useful life, reflecting what it can be sold for or scrapped.

Payback Period

The amount of time it takes for an investment to generate cash flow sufficient to recover its initial cost.

Operating Costs

Expenses associated with the day-to-day operations of a business, including rent, utilities, and payroll.

Purchase Price

The amount paid to acquire a product or service, or the cost at which something is bought.