Asked by Anselin Aryee on Jun 26, 2024
Verified
In determining comparative advantage,the cost of producing a good is measured in terms of:
A) foreign currency.
B) domestic currency.
C) only gold.
D) marginal cost of the resources employed.
E) opportunities forgone.
Comparative Advantage
The ability of a country, individual, or firm to produce a particular good or service at a lower opportunity cost than others.
Marginal Cost
The cost incurred by producing one additional unit of a product or service.
Opportunities Forgone
The benefits, profit, or value of something that must be given up to acquire or achieve something else.
- Acknowledge the contribution and calculation of opportunity costs in the infrastructure of global commerce.
- Recognize the association between the specialization in goods and services and the optimization of trade, due to comparative advantage.
Verified Answer
JK
Jacob KunzeJul 02, 2024
Final Answer :
E
Explanation :
In determining comparative advantage, the cost of producing a good is measured in terms of opportunities forgone. This concept is central to comparative advantage, as it considers the alternative uses of resources to assess the efficiency of producing one good over another.
Learning Objectives
- Acknowledge the contribution and calculation of opportunity costs in the infrastructure of global commerce.
- Recognize the association between the specialization in goods and services and the optimization of trade, due to comparative advantage.