The First Example of Comparative Advantage Appeared in a Book

question 17

Multiple Choice

The first example of comparative advantage appeared in a book that was published in 1817.This example showed that mutually beneficial trade between two countries (England and Portugal) was possible.The example assumed that two goods (wine and cloth) could be produced by both countries.Which of the following describes the conclusion of this example?

• A)Portugal had a comparative advantage in wine and England had a comparative advantage in cloth.
• B)Portugal had a comparative advantage in both wine and cloth,but its advantage in cloth was greater.
• C)England had a comparative advantage in both wine and cloth,but its advantage in cloth was greater.
• D)England had an absolute advantage in both wine and cloth,but a comparative advantage in wine.

Understand the components and calculation of the cost of acquisition in business combinations.

Identify the effects of dividends from a subsidiary on the parent company's financial statements.

Recognize the treatment of goodwill and impairment in consolidated financial statements.

Understand the principles of preparing consolidated financial statements, including consolidation adjustments.

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Definitions:

Market Intermediaries

Businesses or individuals that act as a middleman in the distribution process, facilitating transactions between producers and consumers.

Business-To-Business (B2B)

Describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or a wholesaler and a retailer.

Business-To-Consumer (B2C)

A transaction model where businesses sell products or services directly to consumers, typically through retail or online platforms.