Mary makes 10 pies and 20 cakes a day and her opportunity cost of pro-ducing a cake is 2 pies. Tim makes 20 pies and 10 cakes a day and his op-portunity cost of producing a cake is 4 pies
If Mary and Tim specialize in the good in which they have a comparative advantage ______. A. Mary produces pies
B. Tim produces pies and cakes
C. Mary produces cakes while Tim produces pies
D. Tim produces cakes while Mary produces pies
C Answer C is correct because Mary has the lower opportunity cost of making a cake.
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a. adverse selection b. forced saving c. moral hazard d. seigniorage e. all of the above
In the generalized dividend model, a future sales price far in the future does not affect the current stock price because
A) the present value cannot be computed. B) the present value is almost zero. C) the sales price does not affect the current price. D) the stock may never be sold.
By dividing the value of total domestic output (real Gross Domestic Product (GDP)) by the number of workers, economists derive
A) the net domestic product. B) labor productivity. C) the size of the labor force. D) the rate of capital accumulation.
When factor markets are competitive, it always pays a profit-maximizing firm to
a. use more of the factor. b. bid very low prices for inputs. c. reduce the use of all inputs. d. use that quantity of input that makes MRP equal to the price of the input.