In one hour John can produce 20 loaves of bread or 8 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.
C
Economics
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A) Opportunity cost = explicit cost - implicit cost. B) Total cost = fixed cost + implicit cost. C) Total cost = fixed cost + variable cost. D) Variable cost = wages + salaries + benefits.
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