Countries Gain from Specializing in Producing Goods in Which They

question 87

Multiple Choice

Countries gain from specializing in producing goods in which they have ________ and trading for goods in which other countries have ________.

• A)a comparative advantage; an absolute advantage
• B)an absolute advantage; an absolute advantage
• C)a comparative advantage; a comparative advantage
• D)an absolute advantage; a comparative advantage

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Definitions:

Conversion

The process of changing resources or inputs into outputs such as goods or services, often referring to the labor and overhead costs associated with manufacturing.

Direct Materials

Raw materials that are directly incorporated into a finished product and can be directly allocated to that product.

Abnormal Spoilage

Waste or defects in the manufacturing process that exceed the normal or expected rate of spoilage, often resulting in additional costs for a company.

Normal Spoilage

The expected amount of waste or loss of materials during a manufacturing process that is considered an unavoidable cost of production.