Ellie and Brendan Both Produce Apple Pies and Vanilla Ice

question 10

True/False

Ellie and Brendan both produce apple pies and vanilla ice cream. If Ellie's opportunity cost of one apple pie is 1/2 gallon of ice cream and Brendan's opportunity cost of one apple pie is 1/4 gallon of ice cream, Ellie has a comparative advantage in the production of ice cream.

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Definitions:

Utilities Possibilities Frontier

Represents the maximum utility levels that two individuals or more can achieve within a given set of resources, emphasizing trade-offs and efficiency.

Efficient

An economic state where every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.

Marginal Utility

The additional utility or satisfaction a consumer gains from consuming one more unit of a good or service.

Apples

A common fruit consumed worldwide, often used as an example in economic models and comparisons.