Homer and Teddy Are Stranded on a Desert Island

question 375

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

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Definitions:

Specified Amount

A specified amount refers to a particular or agreed sum of money or quantity of a resource or asset.

Tariff

A tariff is a tax imposed by a government on goods and services imported from other countries, used to restrict trade, as they increase the cost of imported goods and services, making them less competitive than domestic goods.

Domestic Consumers

Individuals or households within a country that purchase goods and services for personal use.

Protected Industry

An industry that receives government support through measures like tariffs, quotas, and subsidies to shield it from foreign competition.