If Country X Can Produce a Unit of Good 1

question 52

Multiple Choice

If country X can produce a unit of good 1 at a lower opportunity cost than can country Y, it is correct to state that country X

• A) has a comparative advantage in producing good 1.
• B) has an absolute advantage in producing good 1.
• C) will import good 1 from country Y.
• D) will not produce good 1.

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Definitions:

Deadweight Loss

An economic inefficiency that occurs when there is a difference between the supply and demand equilibrium caused by market distortions, resulting in loss of economic efficiency.

Surcharge

An additional charge, tax, or cost added to the usual cost or to the price of a transaction.

Professional Basketball Game

An organized, competitive basketball contest played by professionals in a league, often characterized by high skill levels and entertainment value.

Deadweight Loss

A loss in economic efficiency that can occur when the equilibrium for a good or service is not achieved or is unattainable.