Which of the Following Statements Is True Regarding Absolute Advantage

question 158

Multiple Choice

Which of the following statements is true regarding absolute advantage?

• A) Developing countries possess no absolute advantage.
• B) A nation must first possess a comparative advantage before it can possess an absolute advantage.
• C) Absolute advantage is becoming rarer these days.
• D) Every country possesses an absolute advantage.

---

Definitions:

Marginal Costs

The amount spent on producing an extra unit of a product or service.

Fixed Costs

Costs that do not vary with the level of output or sales in the short term, such as rent or salaries.

Sunk Costs

Costs that have already been incurred and cannot be recovered or refunded, and thus should not factor into future decision-making processes.

Fixed Costs

Fixed expenditures that are unaffected by changes in production or sales volumes, like rent, wages, and insurance costs.