Homer and Teddy Are Stranded on a Desert Island

question 302

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

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Definitions:

Salary Allowance

A fixed amount of money given to employees in addition to their regular salary, often covering specific expenses or compensations.

Income-Sharing Ratio

The proportion in which partners in a business agree to distribute the net income or loss.

Salary Allowance

A fixed amount or benefit often added to an employee's salary, such as for travel or housing.

Capital Balance

The amount of money that shareholders have contributed to a company plus retained earnings or minus accumulated losses.