In 1 hour, Robinson Crusoe can either shoot 4 birds or catch 4 fish. A typical native on a nearby island can either shoot 5 birds or catch 10 fish in an hour's time. Which of the following is true according to the doctrine of comparative advantage?
a. Crusoe will be better off if he specializes in either activity and then trades with the natives.
b. The natives have a comparative advantage in both shooting birds and catching fish, so Crusoe cannot make himself better off by trading with the natives.
c. Crusoe should concentrate on shooting birds and then trade with the natives to obtain fish.
d. Crusoe should spend his time catching fish, and he should trade with the natives to obtain birds.
c. Crusoe should concentrate on shooting birds and then trade with the natives to obtain fish.
You might also like to view...
Refer to the scenario above. Which of the following problems is most likely to arise in this case?
A) Adverse selection B) Moral hazard C) The tragedy of the commons D) The free-rider problem
Which of the following statements is true for a normal good?
(a) An increase in income will result in an increase in supply, ceteris paribus. (b) An increase in income will result in an increase in demand, ceteris paribus. (c) An increase in income will result in an decrease in demand, ceteris paribus (d) An increase in income will have no effect on demand, ceteris paribus.
When the price system fails to generate an efficient allocation of resources
A. too few or too many goods will be produced. B. consumers will spend less. C. the market will always correct it. D. business will produce more.
According to the text, successful firms tend to set up
A. an organizational architecture that links decision making with decision rights. B. an organizational architecture that is complex and decisions are "top-down." C. an organizational architecture that keeps decision rights reserved for the senior management. D. an organizational architecture that is least expensive and decisions are "top-down."