Tom and Jerry Have One Day to Work, but Two

question 28

Multiple Choice

Tom and Jerry have one day to work, but two tasks to focus on: building chairs and tables. If Tom spends all day building chairs, he will make 16 chairs. If he instead devotes his day to building tables, Tom will make 4 tables. If Jerry spends his day building chairs, he will make 14 chairs; if he spends the day building tables, he will make 7 tables. After looking at the production possibilities for both Tom and Jerry, what can we surmise?

• A) Tom has an absolute advantage at producing both chairs and tables.
• B) Jerry has an absolute advantage at producing both chairs and tables.
• C) Tom has an absolute advantage at producing chairs and Jerry has an absolute advantage at producing tables.
• D) Tom has an absolute advantage at producing tables and Jerry has an absolute advantage at producing chairs.

Analyze the concept of the winner's curse and its implications in common-value auctions.

Understand the dynamics of oral auctions with multiple bidders.

Grasp the fundamental differences between common-value and private-value auction settings.

Comprehend the impact of information release on auction outcomes.

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Definitions:

Class Inclusion Tasks

Cognitive tasks that assess a person's ability to understand that one category or class can include several different subcategories simultaneously.

Seriation

Placing objects in an order or series according to a property or trait.

Linear Thinking

A thought process that follows a straight, direct path to reach a conclusion or solution, often focusing on sequential steps.

Causality

The relationship between a cause and its effect, where one event is understood to be a consequence of the other.