Assume That Bulgaria Has a Comparative Advantage in Producing Sandals

question 350

Multiple Choice

Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria. We can conclude that

• A) Bulgaria also has an absolute advantage in producing sandals relative to Finland.
• B) Bulgaria has a lower opportunity cost of producing sandals relative to Finland.
• C) Finland has an absolute disadvantage in producing sandals relative to Bulgaria.
• D) Labor costs are higher for sandal producers in Finland than in Bulgaria.

---

Definitions:

Unit Product Cost

The sum of variable and fixed expenses incurred in the creation of a single product unit.

Direct Labor-Hours

The total hours of labor directly involved in manufacturing a product or providing a service.

Predetermined Overhead Rate

A rate calculated before the start of a period, used to allocate overhead costs to products based on a chosen allocation base, such as labor hours or machine hours.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and salaries for management.