Anita Can Bake 10 Cakes in a Day, but Has

question 40

Multiple Choice

Anita can bake 10 cakes in a day, but has no time left to make cookies. If she bakes only cookies, she can make 200 cookies in a day. John makes equally delicious cakes and cookies but can only make 7 cakes or 100 cookies in a day. Based on this information, which of the following statements is TRUE?

• A) Anita has the comparative advantage in the production of cakes.
• B) John has the comparative advantage in the production of cakes.
• C) John has the absolute advantage in the production of cookies.
• D) Anita has the comparative advantage in the production of both cakes and cookies.

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Definitions:

Direct Welfare

Governmental assistance provided directly to individuals in the form of cash payments or services, aimed at improving the living conditions of the economically disadvantaged.

National Defense

The governmental actions, policies, and military measures taken to protect a country from external threats and ensure national security.

Trade Protection

Involves government policies and measures aimed at shielding domestic industries from foreign competition, using tools such as tariffs, quotas, and subsidies.

Fiscal Deficits

Happens when the expenses of a government surpass its income, not counting funds acquired through borrowing.