Figure 3-5 These Graphs Illustrate the Production Possibilities Available for Dancing Shoes

question 180

Multiple Choice

Figure 3-5
These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour.
-Refer to Figure 3-5. What does each of the two producers have an absolute advantage in?

• A) Ginger has an absolute advantage in ballet slippers, and Fred has an absolute advantage in tap shoes.
• B) Ginger has an absolute advantage in tap shoes, and Fred has an absolute advantage in ballet slippers.
• C) Ginger has an absolute advantage in neither good, and Fred has an absolute advantage in both goods.
• D) Ginger has an absolute advantage in both goods, and Fred has an absolute advantage in neither good.

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Definitions:

Marginal Cost Curve

A graphical representation showing how the cost to produce one additional unit of output changes as production increases.

Shut Down

A short-term decision by a firm to cease operations because operating costs exceed revenue, usually considered in the context of price being less than variable costs.

Total Fixed Costs

A company's expenses that do not change with the level of production or services, such as rent, salaries, and insurance premiums.

Financial Well-being

A state where an individual has achieved a satisfactory level of financial security and freedom to make choices that allow them to enjoy life.