If a Country Has the Comparative Advantage in Producing a Product

question 38

True/False

If a country has the comparative advantage in producing a product, then that country must also have the absolute advantage in producing that product.

---

Definitions:

Markup Percentage

The percentage by which the cost of a product is increased to determine its selling price.

Direct Materials

Direct materials are raw materials that are directly traceable to the manufacturing of a product and are a significant component of the total manufacturing cost.

Variable Manufacturing Overhead

Costs involved in the manufacturing process that fluctuate with the level of production, such as utility expenses or materials costs.

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.