Suppose that Rosie and Betty spend their free time making cakes and cookies
Is it possible for Betty to have an absolute advantage in the production of both cakes and cookies? Is it possible for Betty to have a comparative advantage in the production of both cakes and cookies? Explain.
Yes, it is possible for Betty to have an absolute advantage in the production of cakes and cookies. This simply means that she is able to produce more per hour. However, Betty cannot have a comparative advantage in producing both cakes and cookies. Because the opportunity cost of producing a cookie is the reciprocal of the opportunity cost of making a cake, it is impossible to have the lower opportunity cost of each.
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What will be an ideal response?
Refer to Table 2-2. Assume Billie's Bedroom Shop only produces pillows and blankets. A combination of 27 pillows and 14 blankets would appear
A) along Billie's production possibilities frontier. B) inside Billie's production possibilities frontier. C) outside Billie's production possibilities frontier. D) at the vertical intercept of Billie's production possibilities frontier.
Jessica owns a company that makes pre-packaged sandwiches for convenience stores. The market price for a sandwich is $5 and Jessica is a price-taker. Her daily cost for making sandwiches is C(Q) = 2.5Q + (Q2/40) and her marginal cost is MC = 2.5 + (Q/20). How many sandwiches should Jessica produce each day?
A. 20 B. 40 C. 45 D. 50
Which of the following accurately explains a difference between the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve?
a. The LRAS curve reflects constant input prices with adjustable output prices, whereas the SRAS curve reflects adjustable input and output prices. b. The LRAS curve reflects constant output prices with adjustable input prices, whereas the SRAS curve reflect constant output prices. c. The SRAS curve reflects constant input prices with adjustable output prices, whereas the LRAS curve reflects adjustable input and output prices. d. The SRAS curve reflects constant output prices with adjustable input prices, whereas the LRAS curve reflects constant input and output prices.