According to the Theory of Comparative Advantage, Trade and Specialization

question 185

Multiple Choice

According to the theory of comparative advantage, trade and specialization ________ productivity by ________ opportunity costs.

• A) raise; raising
• B) raise; lowering
• C) lower; raising
• D) lower; lowering

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Definitions:

Decoupling Function

describes the practice of separating different parts of a production process so that a delay or failure in one area does not directly impact another, enhancing flexibility and reliability.

Quantity Discount Problem

A pricing strategy issue where the cost per item lowers as the quantity purchased increases, necessitating analysis for optimal purchasing decisions.

Setup Cost

The expenses incurred to prepare equipment, machinery, or a production line for the manufacture of a new batch of goods.

Holding Cost

The expenses associated with storing unsold goods or materials, including warehousing, insurance, and opportunity costs.