Don Can Produce 10 Pens or 20 Pencils in One

question 12

Multiple Choice

Don can produce 10 pens or 20 pencils in one hour while Bob can produce 5 pencils or 15 pens in one hour.Which of the following statements is correct?

• A)Bob has an absolute advantage over Don in the production of pencils.
• B)Bob has an absolute advantage over Don in the production of pens.
• C)Bob has a comparative advantage over Don in the production of pencils.
• D)Don has a comparative advantage over Bob in the production of pens.
• E)Don does not have a comparative advantage in the production of either good.

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Definitions:

Rent Expense

The cost incurred for using a property or equipment that is not owned by the company, typically charged on a periodic basis.

Adjusting Entry

A journal entry made in the accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Supplies Used

The cost of materials and supplies consumed during an accounting period in the course of operations.

Supplies Account

An account used in accounting to track the cost of supplies spent over a specific period.