In One Hour,Sue Can Produce 50 Caps or 10 Jackets

question 71

Multiple Choice

In one hour,Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets.Sue's opportunity cost of producing a cap is ________ jackets and Tessa's opportunity cost of producing a cap is ________ jackets.
________ has a comparative advantage in producing caps.
If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps,________.

• A)0.2;0.10;Sue;Tessa gains but Sue loses
• B)5.0;10.0;Tessa;Sue loses but Tessa gains
• C)5.0;10.0;Sue;both Sue and Tessa gain
• D)0.2;0.10;Tessa;both Sue and Tessa gain
• E)0.2;0.10;Sue;both Sue and Tessa gain

---

Definitions:

Retail Inventory Method

A method of estimating inventory cost that is based on the relationship of cost to retail price.

Cost To Retail Ratio

Cost To Retail Ratio is a method used to estimate the inventory value by comparing the cost of goods available for sale to the retail price of the goods.

Goods Sold

Refers to merchandise or products that have been sold by a business.

Earliest Costs

Refers to the initial expenses or purchase prices of inventory items, typically considered for cost calculation in accounting methods like LIFO (Last-In, First-Out).