Suppose That Lo and Manuel Can Either Run Errands or Wash

question 173

Multiple Choice

Suppose that Lo and Manuel can either run errands or wash dishes. Their maximum outputs per hour are listed in the following table. Given the same quantity of resources, at what terms of trade relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontiers PPFs) ? $$\begin{array} { l l l l l } \hline & \begin{array} { l } \text { Erran } \\\text { ds } \\\text { Run }\end{array} & \begin{array} { l } \text { Opportunity } \\\text { Cost } \\\text { of } 1 \text { Errand }\end{array} & \begin{array} { l } \text { Dishes } \\\text { Washe } \\\text { d }\end{array} & \begin{array} { l } \text { Opportunity Cost } \\\text { of } 1 \text { Dish Washed }\end{array} \\\hline \text { Lo } & 1 & 60 \text { dishes } & 60 & 1 / 60 \text { errand } \\\text { Marue } & 3 & 15 \text { dishes } & 45 & 1 / 15 \text { errand } \\1 & & & & \\\hline\end{array}$$

• A) 1 errand run per 75 dishes washed
• B) 1 errand run per 30 dishes washed
• C) 1 errand run per 12 dishes washed
• D) 1 errand run per 10 dishes washed
• E) 1 errand run per 6 dishes washed

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Definitions:

Revenue Recognition

The accounting principle that revenue should be recorded when earned, regardless of when payment is received, ensuring accurate financial reporting.

Period Of Sale

The time period between when a product is listed for sale and when it is actually sold.

Partial Billings

Invoicing method where a customer is billed incrementally for partially completed work, often used in long-term projects.

Completed-Contract Method

An accounting technique where revenue and expenses of a long-term contract are recorded only when the project is completed.