The First Example Used to Explain Comparative Advantage Used Two

question 176

Multiple Choice

The first example used to explain comparative advantage used two countries (England and Portugal) and two goods (wine and cloth) to show that

• A)each country would be better off from trade if it had an absolute advantage in producing one of the goods.
• B)each country would have a comparative advantage in the production of the good for which it had an absolute advantage.
• C)mutually beneficial trade was possible between two countries even if one had an absolute advantage in the production of both goods.
• D)mutually beneficial trade was possible between two countries even if one had a comparative advantage in the production of both goods.

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Definitions:

Accrual Basis Accounting

An accounting method where revenues and expenses are recorded when earned or incurred, regardless of when the cash transactions occur.

Statement of Retained Earnings

A financial statement that shows the changes in a company's retained earnings over a specific period.

Net Income

The remaining profit of a company post deduction of all expenses, taxes, and costs from its total revenues.

Unearned Revenues

Income received by a company for goods or services to be provided in the future, which is recorded as a liability until earned.