Tom and Jerry Have One Day to Work, but Two

question 140

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. The opportunity cost of building one table is _____ for Tom and _____ for Jerry. Therefore, Tom should specialize in _____.

• A) 4 chairs; 2 chairs; chairs
• B) 16 chairs; 14 chairs; chairs
• C) 4 chairs; 2 chairs; tables
• D) 16 chairs; 14 chairs; tables

Analyze market conditions and strategies in different scenarios involving goods with network externalities.

Understand the concept of separating and pooling equilibria in economic contexts.

Analyze the implications of information asymmetry in used car markets.

Apply the theory of adverse selection to various market scenarios.

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Definitions:

Numbers

Symbols or words that represent quantities or values, used in counting, measuring, and performing mathematical operations.

Commercial

Pertaining to commerce or business, often relating to advertising or the buying and selling of goods and services.

Social Significance

The impact or importance of a phenomenon, event, or trend in terms of its influence on societal norms, values, or behaviors.

Stories

Narratives or accounts of a series of events, real or imaginary, told for entertainment or educational purposes.