Despite Specialization and Comparative Advantage, Household Production Still Exists Because

question 72

Multiple Choice

Despite specialization and comparative advantage, household production still exists because for some households

• A)the opportunity cost of production at home is greater than the cost of purchasing the good in the market
• B)production at home is less costly than purchasing the good in the market
• C)the value of home production exceeds the sunk cost of home production
• D)the value of home production is ignored
• E)food and clothing expenditures represent a small portion of their total budget

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Definitions:

Net Plant

The total value of a company's property, plant, and equipment minus accumulated depreciation, representing the net book value of physical assets used in operations.

Operating Cycle

This refers to the period of time it takes for a business to purchase inventory, sell products, and receive cash from sales.

Sales on Account

Transactions in which goods or services are sold but payment is deferred, creating accounts receivable for the seller.

Cost of Goods Sold

Represents the direct costs attributable to the production of the goods sold by a company, including material, labor, and manufacturing overhead costs.