Which of the Following Statements About Comparative Advantage Is Not

question 129

Multiple Choice

Which of the following statements about comparative advantage is not true?

• A)Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources.
• B)The principle of comparative advantage applies to countries as well as to individuals.
• C)Economists use the principle of comparative advantage to emphasize the potential benefits of free trade.
• D)A country may have a comparative advantage in producing a good, even though it lacks an absolute advantage in producing that good.

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Definitions:

Product Costs

The three components of manufacturing cost: direct materials, direct labor, and factory overhead costs.

Direct Labor

The labor cost associated with workers who are directly involved in the production of goods or the provision of services.

Direct Materials

Raw materials that are directly incorporated into the finished product and can be easily traced to it.

Ideal Standards

Standards that can be achieved only under perfect operating conditions, such as no idle time, no machine breakdowns, and no materials spoilage; also called theoretical standards.