Moe Divides His Time Between Studying Physics and Studying Economics

question 18

Multiple Choice

Moe divides his time between studying Physics and studying Economics.His production possibilities curve for his final grade in each class is shown below. Which of the following is true?

• A)Moe has a comparative advantage in physics.
• B)Moe's opportunity cost of studying for each subject is increasing.
• C)Moe has a comparative advantage in economics.
• D)Moe has an absolute advantage in economics.

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Definitions:

Expenses

Outflows or other using up of assets or incurrence of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity’s ongoing major or central operations.

Held-to-maturity Securities

Financial assets purchased with the intention and ability to hold them until a specified maturity date.

Fair Value

The estimated price at which an asset or liability could be sold or settled in a current transaction between willing parties.

Equity Method

An accounting technique used to record investments in associate companies where the investor has significant influence but not full control, recognizing income in proportion to their share of the earnings.