Consider two individuals, Ozzy and Sharon, who produce toy boats and yoyos. Ozzy's and Sharon's hourly productivity are as follows:?Yoyos /hourToy boats /hourOzzy124Sharon105Who has the absolute advantage or comparative advantage in the production of yoyos or boats?
What will be an ideal response?
Sharon has the absolute advantage in boats and Ozzy has the absolute advantage in yoyos. Sharon also has the comparative advantage in boats while Ozzy has it in yoyos, because Sharon's opportunity cost of producing one boat per hour is 2 yoyos, and Ozzy's opportunity cost of producing one boat per hour is 3 yoyos.
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(a) One tenth. (b) One fifth. (c) Two fifths. (d) One half.
A "revaluation" occurs when
A) a nation's currency appreciates under a flexible exchange rate system. B) the official price of a currency is lowered. C) a nation's currency depreciates under a flexible exchange rate system. D) the official price of a currency is raised. E) none of the above
Current income maintenance programs
A) often provide benefits to people who are working and earning substantially more than the poverty level. B) reduce the incentive of recipients to work. C) have safeguards to ensure that recipients work whenever physically able. D) fail to make the income distribution more equal.