Table 183
-Consider Two Individuals, Nigel and Mia, Who Produce Hair

question 5

Multiple Choice

$\begin{array}{l|c|c|}\hline & \text { Hair Pins/hour } & \begin{array}{c}\text { Bandanas } \\\text { /hour }\end{array} \\\hline \text { Nigel } & 4 & 10 \\\hline \text { Mia } & 9 & 3 \\\hline\end{array}$
Table 18.3
-Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel?s and Mia?s hourly productivity are shown in Table 18.3. Which of the following is true?

• A)Nigel has an absolute advantage in producing hair pins but not bandanas.
• B)Nigel has an absolute advantage in producing bandanas but not hair pins.
• C)Nigel has an absolute advantage in producing both goods.
• D)Nigel does not have an absolute advantage in producing either good.

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Definitions:

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to determine their relative value.

Exchange Rate

The exchange value of one currency against another.

Identical Basket

A concept used in economics to compare the cost of a specific set of goods and services across different geographical locations or time periods.

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to assess their purchasing power.