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Suppose only two people on the frontier: Susy and Bob, and two goods: rifles and shelter. If Susy has the comparative advantage in producing rifles, and Bob has the absolute advantage in producing both goods, then: a. No gains from trade can be made and Bob should produce in isolation. b. Bob has a comparative advantage in rifles as well. c. Bod has the comparative advantage in producing shelter. d. Susy should specialize in creating shelter. Explain definitions of comparative advantage and absolute advantage while giving answer please... I believe it is A

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Paramjeet Chawla
Paramjeet ChawlaLv8
28 Sep 2019

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16) Consider the following household. In 5 hours, Bob can cook 5 meals or clean 6 rooms. In 5 hours, Mary can cook 30 meals or clean 10 rooms. Select the best statement. A) Since Mary is better at producing both goods, she should produce both. B) Bob has a comparative advantage in cooking. C) Mary should specialize in cooking. D) Bob has an absolute advantage in the production of both goods. E) none of the above

In one day Adam can produce either 5 shirts or 10 ties, and in one day Bob can produce either 6 shirts or 15 ties. Of course, Adam or Bob could split their time between producing shirts and ties and produce some combination of the two goods. Suppose Adam and Bob each specialize in the production of the good for which he has a comparative advantage. At which of the following prices will both Adam and Bob gain from trade?

a. 6 ties for 2 shirts

b. 4 ties for 1 shirt

c. 7 ties for 4 shirts

d. None of these choices

Ā 

1. The law of comparative advantage says that:

A. whoever has an absolute advantage in producing a good also has a comparative advantage in producing that good.

B. whoever has a comparative advantage in producing a good also has an absolute advantage in producing that good

C. the individual with the lowest opportunity cost of producing a particular good should produce it

D. comparative advantage exists only when one person has an absolute advantage in the production of two goods

2. A country has an absolute advantage in the production of a good if that country:

A. can produce good using fewer resources than another country would require

B. has the lowest opportunity cost of producing the good, regardless of whether it is produced with the fewest resources

C. has the greatest opportunity cost of producing the good, regardless of whether it is produced with the fewest resources

D. has the lowest opportunity cost of producing the good and can produce it with the fewest resources

3. A production possibilities frontier can shift outward for all of the following reasons except:

A. a larger workforce

B. a decrease in the size of the labor force

C. an increase in the skills of the labor force

D. an improvement in technology

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