When Nations Specialize in Their Areas of Comparative Advantage and Then

question 183

Multiple Choice

When nations specialize in their areas of comparative advantage and then trade with the rest of the world, the result is that

• A) the average standard of living in the world will go down.
• B) the average standard of living in the world will go up.
• C) the world will move from a point on the production possibilities curve to a point inside the curve.
• D) worldwide economic efficiency will decrease.

---

Definitions:

Taxable Income

The amount of income used to calculate how much the entity or individual owes in taxes to the government.

Tax Bill

The amount of money owed by an individual or corporation to the taxing authorities as a result of income or other taxes.

Net Fixed Assets

The total value of a company’s fixed assets minus any accumulated depreciation.

Depreciation

An accounting method of allocating the cost of a tangible or physical asset over its useful life to account for declines in value.