It Takes Anne 3 Hours to Make a Pie and 4

question 26

True/False

It takes Anne 3 hours to make a pie and 4 hours to make a shirt. It takes Mary 2 hours to make a pie and 5 hours to make a shirt. Anne should specialize in making shirts and Mary should specialize in making pies, and they should trade.

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Definitions:

Economic Profit

The difference between a firm's total revenue and its total costs, including both explicit and opportunity costs.

Opportunity Cost

The highest valued alternative that must be sacrificed as a result of choosing an option.

Economic Losses

The decrease in wealth or resources experienced by an individual, organization, or country, typically measured by cost incurred that are not offset by gains.

Value of Resources

The worth placed on natural, human, and capital assets based on their utility in producing goods and services.