You Have a Comparative Advantage When Your

question 166

Multiple Choice

You have a comparative advantage when your

• A) opportunity cost is lower than your absolute cost.
• B) opportunity cost is lower than your competitor's opportunity cost.
• C) absolute cost is lower than your competitor's absolute cost.
• D) absolute cost is greater than your competitor's absolute cost.
• E) opportunity cost is greater than your competitor's opportunity cost.

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Definitions:

Plant Manager's Salary

The compensation paid to the individual responsible for overseeing the operations of a manufacturing facility.

Period Costs

Expenses that are not directly tied to the production process and are instead incurred over a specific time period, such as selling, general, and administrative expenses.

Operating Costs

Expenses associated with running a business on a day-to-day basis, such as rent, utilities, and payroll, excluding costs associated with producing goods.

Factory Overhead

Encompasses all indirect costs involved in manufacturing, excluding direct materials and direct labor, such as utilities and rent for the manufacturing space.