Which Statement Is True

question 171

Multiple Choice

Which statement is true?

• A)Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost.
• B)Comparative advantage means that total world output will decline when each good is produced by the nation with the lowest domestic opportunity cost.
• C)Specialization is complete among nations when opportunity costs rise as any given nation produces more of a particular product.
• D)Specialization is less than complete among nations when opportunity costs rise as any given nation produces more of a particular product.

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Definitions:

Excess Burden

The cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium, often due to taxation or other government intervention.

Revenue Derived

Income generated from normal business operations or other specific sources.

Tax Rate

The per-unit amount of the tax or the percentage rate at which the economic activity is taxed.

Tax Burden

The aggregate sum of taxes that individuals or businesses remit, correlated to their earnings or profits.