If Jeremy Has an Absolute Advantage in Cooking and Margaret

question 76

Multiple Choice

If Jeremy has an absolute advantage in cooking and Margaret has an absolute advantage in cleaning, then

• A)Jeremy has a comparative advantage in cooking, and Margaret has a comparative advantage in cleaning
• B)Jeremy has a comparative advantage in cleaning, and Margaret has a comparative advantage in cooking
• C)we can conclude nothing about comparative advantage
• D)Jeremy has a comparative advantage in cooking, but we can conclude nothing about Margaret
• E)Margaret has a comparative advantage in cleaning, but we can conclude nothing about Jeremy

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Definitions:

Consumer Surplus

The variance between the actual cost paid by consumers and the maximum amount they're prepared to pay for a good or service.

Market Equilibrium

The point at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a stable market price.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product or service to prevent market prices from rising above a certain level.

Consumer Surplus

The variation between the price consumers are willing to offer for a product or service and the actual payment made.