The Principle of Comparative Advantage Essentially States That

question 182

Multiple Choice

The principle of comparative advantage essentially states that

• A) there are some goods for which the opportunity costs of production are the same regardless of who produces them.
• B) some goods have high opportunity costs and low absolute costs.
• C) specialization can reduce output rather than increase it.
• D) total output of an economic system is greatest when each good is produced by those who have the lowest opportunity cost of producing the good.

Analyze the role of market competition in maximizing total benefits to buyers and sellers.

Understand how public policy can affect market efficiency and address market failures.

Recognize the importance of willingness to pay in determining consumer surplus.

Insight into how market conditions, such as price ceilings and floors, affect consumer and producer surplus.

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