The Existence of Absolute Advantage

question 140

Multiple Choice

The existence of absolute advantage

• A)implies that there will be no benefits from trade taking place between two nations.
• B)refers to a situation where one country can produce one particular good with fewer units of resources than the other country.
• C)fosters the self-sufficiency of the two nations.
• D)refers to a situation in which one country can produce all goods with fewer units of resources than can another country.

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Definitions:

Total Revenue

The overall financial gain a business obtains from the sale of goods or delivery of services within a specific timeframe.

Competitive Price-searcher

A market situation where firms have some control over their prices because their products are differentiated, leading them to search for competitive pricing strategies.

Marginal Cost

The cost incurred by producing one additional unit of a product.

Average Cost

The cost per unit of output, represented by dividing the total production cost by the quantity of units produced.