CLEP Marketing

Category - International

China produces affordable microwave ovens at a cost that is lower than all of its competitors in the global market, which means that the country has _____________.
  1. Absolute advantage
  2. Large employee base
  3. Significant technological expertise
  4. Absolute expertise
  5. Greater resources than competitors
Explanation
Answer: A - China produces affordable microwave ovens at a cost that is lower than all of its competitors in the global market, which means that the country has absolute advantage. When a country can produce a product or service at a lower cost, using the same resources as other countries, it is said to have absolute advantage. In this example, China has absolute advantage in producing affordable microwave ovens, which means that, per unit, it can make an oven at a cheaper cost than a country such as Germany or Japan.
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