Suppose That a Worker in Country a Can Make Either

question 69

Multiple Choice

Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Country A has an absolute advantage at producing:

• A) iPhones.
• B) iPads.
• C) both iPhones and iPads.
• D) neither iPhones nor iPads.

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Definitions:

Short-Run Average Total Cost (ATC)

The total cost per unit of output in the short run, where some factors of production are fixed.

Profit-Maximizing Level

The output level at which a firm achieves the highest profit, where marginal revenue equals marginal cost.

Average Total Costs (ATC)

A rephrasing of Average Total Cost, it calculates the per-unit production cost by dividing the total cost by the total quantity of goods produced.

Manufacturing Firm

A business that uses components, parts, or raw materials to make a finished good.