When a Country Has a Lower Opportunity Cost in Producing

question 83

Multiple Choice

When a country has a lower opportunity cost in producing a good than any other country,

• A)It necessarily has an absolute advantage in producing the good.
• B)It has favorable terms of trade in producing the good.
• C)Consumption possibilities will increase with specialization and trade.
• D)Production possibilities are no longer limited.

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Definitions:

Present Value

The today's value of money or cash flows to be received in the future, factored by a particular rate of return.

Oil Reserve

Quantities of crude oil that are held underground or in storage, available for extraction and use.

Market Rate Of Interest

The prevailing rate at which interest is paid by borrowers for loans or earned by investors in the marketplace, determined by supply and demand forces.

Market Rate Of Interest

The prevailing rate of interest determined by supply and demand in the credit market.