Comparative Advantage Quiz

What is opportunity cost?

• The loss or sacrifice of potential gain from other alternatives when one alternative is chosen.

• The value of the next best alternative that is forgone

• The financial cost of an opportunity

• The benefit gained from choosing one alternative over another

What is absolute advantage?

• Ability to produce a good or service with average cost and efficiency

• Inability to produce a good or service at any cost

• Ability to produce a good or service at a lower cost or with higher efficiency than others

• Ability to produce a good or service at a higher cost or with lower efficiency than others

What is comparative advantage?

• The ability to produce a good or service at a lower opportunity cost than others.

• The ability to produce a good or service at a higher opportunity cost than others.

• The ability to produce a good or service without considering opportunity cost.

• The ability to produce a good or service at the same opportunity cost as others.

Which concept focuses on the cost of giving up the next best alternative?

• Fixed cost

• Marginal cost

• Sunk cost

• Opportunity cost

Which concept focuses on the ability to give up the next best alternative when making a decision?

• Opportunity cost

• Sunk cost

• Fixed cost

• Marginal cost

In international trade, countries specialize in producing goods or services in which they have:

• absolute disadvantage

• random selection

• equal distribution

• comparative advantage

Which concept is used to determine which country should produce which goods or services?

• absolute advantage

• opportunity cost

• command economy

• comparative advantage

Ms. Birgenheier's favorite country in the world is:

• Italy

• Germany

• Croatia

• Mexico