Homer and Teddy Are Stranded on a Desert Island

question 124

Multiple Choice

Homer and Teddy are stranded on a desert island.To feed themselves each day they can either catch fish or pick fruit.In a day,Teddy could pick 60 pieces of fruit or catch 20 fish.Homer could pick 100 pieces of fruit or catch 150 fish.Which of the following is correct?

• A) Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit.
• B) Homer has a comparative advantage in picking fruit and Teddy has a comparative advantage in catching fish.
• C) Homer has a comparative advantage in both catching fish and picking fruit.
• D) Teddy has a comparative advantage in both catching fish and picking fruit.

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Definitions:

Exports

Domestically produced goods and services sold in other countries.

Comparative Advantage

A theory in economics that suggests a country should specialize in producing and exporting goods in which it has a lower opportunity cost than its trading partners.

Absolute Advantage

The ability of an entity to produce a good or service more efficiently than its competitors when using the same amount of resources.

Skilled Human Resources

Individuals within the workforce who possess specialized training, knowledge, and experience in particular fields or disciplines.