Suppose That the U

question 113

Multiple Choice

Suppose that the U.S.has a comparative advantage in the production of spreadsheet software.As a result of opening up the market to international trade,

• A)​U.S.citizens benefit from lower software prices,increasing consumer surplus in the market.
• B)​U.S.software producers are harmed,since the price that these producers receive will decline as the price falls to the world price.
• C)​total surplus in this market will remain unchanged,as the decline in benefits received by software producers exactly balances the increase in benefits received by US software consumers.
• D)​U.S.producers benefit from higher software prices,increasing producer surplus in the market.

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Definitions:

Fixed Component

A cost that does not change with the level of output or activity over a particular period of time.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual units of production, based on estimated costs rather than actual costs.

Volume Variance

A measurement of the difference between the actual production volume and the expected (or budgeted) production volume, affecting the costs incurred.

Variable Component

A cost associated with the production of goods or services that varies with the level of output or sales.