An economy produces only food and shelter. There are two individuals in the economy: Bill and Mary. Mary's opportunity cost of producing 1 unit of shelter is 2 units of food. Bill's opportunity cost of producing 1 unit of shelter is 4 units of food
A) Bill has a comparative advantage over Mary in the production of shelter.
B) Mary has a comparative advantage over Bill in the production of food.
C) Mary has a comparative advantage over Bill in the production of shelter.
D) Bill has an absolute advantage over Mary in the production of shelter.
C
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Diminishing marginal returns occur when
A) the average product of the variable input eventually diminishes. B) the marginal product of an additional worker is less than the marginal product of the previous worker hired. C) the firm hires cheap, less-skilled workers in place of expensive, high-skilled workers. D) total product diminishes.
What determines the demand for labor, the supply of labor, and labor market equilibrium?
What will be an ideal response?