Even If the United States Is More Efficient in the Production

question 59

Multiple Choice

Even if the United States is more efficient in the production of everything than China, both countries will benefit from their bilateral trade by specializing in what each
Country can produce relatively more efficiently. This statement is an example of
Which economic theory?

• A) relative cost advantage
• B) supply and demand
• C) concentric advantage
• D) comparative advantage
• E) constructive advantage

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Definitions:

Contribution Margin

Represents the amount of revenue remaining after deducting variable costs, contributing towards covering fixed costs and generating profit.

Production Capacity

The maximum volume of products or services a company can produce under normal working conditions.

Target Costing

A pricing method where the selling price of a product is determined first, and then production costs are managed to ensure the product can be produced within that target cost.

Variable Product Cost

Refers to the costs that vary directly with the level of production output, including costs like raw materials and direct labor.