Which of the Following Statements About Absolute and Comparative Advantage

question 126

Multiple Choice

Which of the following statements about absolute and comparative advantage is not true? A country may have:

• A) a comparative advantage but not an absolute advantage in the production of a good.
• B) an absolute advantage but not a comparative advantage in the production of a good
• C) the absolute advantage in the production of all goods.
• D) neither absolute nor comparative advantage in the production of any goods.

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Definitions:

Economic Losses

Occurs when a company's total costs exceed its total revenues, indicating a negative economic profit.

Market Price

The ongoing rate at which an asset or service is being traded for in a certain marketplace.

Normal Profits

The minimum level of profit needed for a company to remain competitive in the market, often considered as the break-even point.

Pure Competition

A market structure characterized by a large number of small firms, homogeneous products, and ease of entry and exit, leading to price taking behavior.