Which of the Following Statements Is True About Comparative Advantage

question 6

Multiple Choice

Which of the following statements is true about comparative advantage?

• A)Comparative advantage exists whenever one person,firm,or nation can do something with greater opportunity costs than some other individual,firm,or nation.
• B)Comparative advantage is interesting theoretically,but it is not relevant when evaluating real-world economic conditions.
• C)Third-world countries cannot possibly have a comparative advantage in the production of any good or service because of the relatively low educational attainment of their work force.
• D)Comparative advantage exists whenever one person,firm,or nation can do something with lesser opportunity costs than some other individual,firm,or nation.
• E)Only highly advanced economies can have a comparative advantage in the production of a good or service.

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Definitions:

Initial Recognition

The first accounting entry for an asset or liability, marking its introduction in the financial statements at its fair value.

Financier Lessor

An entity engaged in the business of leasing out assets, typically providing the finance to purchase the asset which is then leased to the user.

Lease Receivable

An asset representing the right to receive future lease payments from lessees under lease agreements, reflecting the value of the asset leased out.

Operating Leases

Leases in which the lessee obtains the right to use an asset for a short period of time, without assuming the risks and rewards of ownership.