Which of the Following Describes Comparative Advantage

question 313

Multiple Choice

Which of the following describes comparative advantage?

• A) Firm A can produce a good at a cost of $3 and Firm B can produce the good at a cost of $4.
• B) Jane can type 50 words per minute and Joe can type 60 words per minute.
• C) To produce a bushel of wheat Farmer John must give up 2 bushels of corn whereas Farmer Ben must give up 3 bushels of corn.
• D) Company A can produce 4 boxes of cereal in a day whereas Company B can produce 5 boxes of cereal in a day.

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Definitions:

Freedom of Contract

The principle that individuals have the liberty to enter into agreements as they choose without unjust government interference.

Noncompetition Clause

A provision in a contract that prohibits one party from competing with another party for a certain period of time and within a certain geographic area.

Legitimate Business Purpose

A rational, honest intention or objective behind a business action or decision, often considered in legal contexts to validate transactions.

Geographic Area

A specific portion of the Earth's surface defined by natural or artificial boundaries, characterized by distinct physical, administrative, or cultural properties.