Scott and Cindy both produce only pizza and tacos. In one hour, Scott can produce 20 pizzas or 40 tacos. In one hour, Cindy can produce 30 pizzas or 40 tacos. Based on these data,
A) Cindy has a comparative advantage at producing tacos.
B) Scott has a comparative advantage at producing tacos.
C) Cindy and Scott have the same comparative advantage in producing tacos.
D) neither Cindy nor Scott has a comparative advantage in producing tacos.
E) Cindy and Scott have the same comparative advantage in producing pizzas.
B
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Diseconomies of scale definitely means that as the firm increases its output, its
A) long-run average total cost increases. B) long-run average total cost decreases. C) short-run average total cost increases. D) short-run average total cost decreases.
Which of the following is not consistent with a self-correcting economy?
a. Falling wages that correct a recessionary gap b. Falling prices that correct a recessionary gap c. Rising prices that correct an expansionary gap d. Tendency of the short-run aggregate supply to shift until it intersects aggregate demand at potential GDP e. An active approach to a recession or depression