In one hour John can produce 20 loaves of bread or 16 cakes. In one hour Phyllis can produce 30 loaves of bread or 15 cakes. Which of the following statements is true?
A) Phyllis has a comparative advantage in producing bread.
B) John has a comparative advantage in producing cakes.
C) Phyllis has an absolute advantage in both goods.
D) John has an absolute advantage in both goods.
E) Phyllis has a comparative advantage in producing both cakes and bread.
B
You might also like to view...
Many governments actively work to:
A. attract foreign direct investment, hoping it will build up their capital stock when domestic savings aren't sufficient. B. attract foreign direct investment, so that when foreign companies invest in local firms, they can transfer human capital to local managers. C. discourage foreign direct investment, in an effort to encourage locals to invest in their own economy. D. discourage foreign direct investment, in an effort to avoid "crowding out."
If doubling the quantity of inputs more than doubles the quantity of outputs, the firm is experiencing
a. increasing returns to scale. b. decreasing returns to scale. c. constant returns to scale. d. increasing costs per unit of output.
The demand curve for any input is the downward-sloping portion of its marginal revenue product curve
a. True b. False Indicate whether the statement is true or false
Marge is lending Martin $1,000 for one year. The CPI is 1.60 at the time the loan is made. They expect it to be 1.76 in one year. If Marge and Martin agree that Marge should earn a 3 percent real return for the year, the nominal interest rate on this loan should be ________ percent.
A. 13 B. 7 C. 16 D. 3