Tom and Jerry Have One Day to Work, but Two

question 112

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 conclude?

• A) Tom has a comparative advantage at producing chairs.
• B) Jerry has a comparative advantage at producing chairs.
• C) Tom has a comparative advantage at producing tables.
• D) Neither Tom nor Jerry has a comparative advantage at producing either good.

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Definitions:

Periodic Inventory System

A method of inventory valuation for financial reporting purposes where a physical count of the inventory is performed at specific intervals and the cost of goods sold is calculated at the end.

Units Sold

The total quantity of products sold by a company during a specific time period, used to assess sales performance.

Units

A measure of quantity or volume in accounting, production, or inventory.

Inventory Cost

The total cost associated with purchasing and preparing inventory for sale, including acquisition, storage, and preparation expenses.