Which of the Following Describes Comparative Advantage

question 63

Multiple Choice

Which of the following describes comparative advantage?

• A) Company A can produce 4 boxes of cereal in a day, whereas Company B can produce 5 boxes of cereal in a day.
• B) Firm A can produce a good at a cost of $3 and Firm B can produce the same good at a cost of $4.
• C) Jane can type 50 words per minute and Joe can type 60 words per minute.
• D) To produce a tonne of wheat Farmer John must give up 2 tonnes of corn, whereas Farmer Ben must give up 3 tonnes of corn.

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Definitions:

Diminishing Marginal Utility

The principle that as an individual consumes more of a good, the utility (satisfaction or benefit) gained from each additional unit decreases.

Total Utility

The overall satisfaction or value a consumer receives from consuming a particular quantity of a good or service.

Marginal Utility

The extra pleasure or benefit obtained from consuming an extra unit of a product or service.

Total Utility

The complete gratification gained from the use of a certain quantity of goods or services.