The Theory of Comparative Advantage Suggests

question 76

Multiple Choice

The theory of comparative advantage suggests:

• A) that an industrialised country should not import.
• B) that a country that is not competitive should import everything.
• C) that a country specialises according to the opportunity cost.
• D) that a country specialises according to the absolute cost.

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Definitions:

Capitalized

The process of recording an expenditure as an asset, rather than an expense, allowing it to be expensed over time through depreciation or amortization.

Inventory

The total value of a company's holdings of goods and materials that are to be sold, are in process of being produced, or are used in producing goods.

Period Costs

Costs that are not directly tied to the production process and are expensed in the period they are incurred, such as selling and administrative expenses.

General Costs

Broadly, expenses that are not directly tied to a specific product or service, often including overhead costs.