When Mike Has an Absolute Advantage in the Production of Two

question 61

Multiple Choice

When Mike has an absolute advantage in the production of two goods over Tommy, Mike

• A) is better off if he does not engage in specialisation and trade with Tommy.
• B) is more productive in producing both goods than Tommy.
• C) is less productive than Tommy.
• D) cannot gain from trade with Tommy.
• E) always has a comparative advantage over Tommy in the production of both goods.

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Definitions:

Direct Management

The process of overseeing and directly controlling operations or tasks without intermediary levels of command.

Charter

A legal document that establishes a corporation or other organization, outlining its purpose, activities, and rights.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation, giving shareholders voting rights.

Shares Outstanding

The total number of shares of stock that are currently owned by shareholders, including restricted shares owned by company insiders.