A Nation Should Only Import Those Goods for Which It

question 1

Multiple Choice

A nation should only import those goods for which it has

• A)lower opportunity costs than its trading partner
• B)higher opportunity costs than its trading partner
• C)zero transaction costs
• D)lower costs of production than its trading partner
• E)absolute advantage in production compared to its trading partner

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Definitions:

Opportunity Cost

The missed opportunity for profit from other options when one option is selected.

Fully Depreciated

The state of an asset after its cost has been completely expensed or written off through depreciation, implying it has no book value.

Average Cost Curve

A graphical representation showing how the average cost per unit of output varies with the level of output.

Marginal Cost Curve

A graphical representation showing how the marginal cost changes with changes in production volume.