If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour, then
A) Irene has the absolute advantage in the production of tables.
B) Greg has the absolute advantage in the production of chairs.
C) Irene has the comparative advantage in the production of chairs.
D) Greg has the comparative advantage in the production of chairs.
Answer: C
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A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000. The fixed cost of production is $20,000. The price of each good is $10. Should the firm continue to produce in the short run?
A) Yes, it should continue to produce because its price exceeds its average fixed cost. B) No, it should shut down because it is making a loss. C) Yes, it should continue to produce because it is minimizing its loss. D) There is insufficient information to answer the question.
If a negative externality exists, __________ in order for the socially optimal output to be reached.
A. supply needs to increase B. supply needs to decrease C. demand needs to increase D. b and c E. none of the above
When a firm’s earnings rise, its stock prices will tend to fall.
Answer the following statement true (T) or false (F)
If the home nation allows free trade but imposes a tariff on a product currently produced by a home firm monopoly, what is the outcome?
a. The home firm then will regain its monopoly control over the price. b. The home firm will be able to charge a higher price (world price + tariff), but it will become a price taker, just like a competitive firm. c. The home nation's firm will be able to limit quantity and charge a higher price. d. The monopoly firm will lower price, increase sales, and undercut the foreign competition.