Suppose a Producer Can Produce Shirts with Lower Opportunity Cost

question 54

Multiple Choice

Suppose a producer can produce shirts with lower opportunity cost than jeans. What else do we need to know if we want to determine this producer's comparative advantage?

• A) how this producer's opportunity cost compares with other producer's opportunity cost
• B) nothing, the producer has a comparative advantage in jeans.
• C) how many hours of work each product requires
• D) nothing, the producer has a comparative advantage in shirts

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Definitions:

Output

The quantity of goods or services produced in a given time period by a firm, industry, or country.

Contraction

A period during which the economy declines as reflected by falling output, employment, income, and other aggregate measures.

Expansion

A period during which the economy grows as reflected by rising output, employment, income, and other aggregate measures

Long-term Growth

The sustained increase in the economic output of a country or region over a significant period.