Table 3-4 -Refer to the Table.If Alberta and Manitoba Trade Based on Manitoba

question 124

Multiple Choice

Table 3-4

-Refer to the table.If Alberta and Manitoba trade based on the principle of comparative advantage,what will be exported

• A)Alberta will export baskets, and Manitoba will export birdhouses.
• B)Alberta will export birdhouses, and Manitoba will export baskets.
• C)Alberta will export neither good, and Manitoba will export both goods.
• D)Alberta will export both goods, and Manitoba will export neither good.

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Definitions:

Variable Production Costs

Expenses that vary directly with the volume of production or sales, like direct labor and raw materials.

Fixed Monthly Cost

Regular expenses that do not fluctuate with production volume or sales, such as rent, salaries, and insurance, billed on a monthly basis.

Contribution Margin

Contribution margin is the difference between sales revenue and variable costs of a product or service, highlighting how much revenue contributes towards covering fixed costs and generating profit.

Fixed Manufacturing Overhead

The portion of manufacturing overhead costs that remains constant regardless of the level of production, such as salaries of supervisors and rent of the factory.