Graph 3-1 These Figures Illustrate the Production Possibilities Frontiers for Robinson Crusoe

question 59

Multiple Choice

Graph 3-1

These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour.
-According to Graph 3-1:

• A)Robinson Crusoe has a comparative advantage in fish, and Friday has an absolute advantage in both goods
• B)Robinson Crusoe has a comparative advantage in fish, and Friday has an absolute advantage in coconuts
• C)Robinson Crusoe has a comparative advantage in fish, and Friday has an absolute advantage in neither goods
• D)Robinson Crusoe has a comparative advantage in coconuts, and Friday has an absolute advantage in fish

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Definitions:

Expense Recognition Principle

An accounting principle that matches expenses with the revenues they helped to generate, recognizing expenses in the same period as the revenues.

Direct Write-off Method

An accounting method where uncollectible accounts receivable are directly removed from the accounts when deemed irrecoverable.

Materiality Constraint

An accounting principle that allows the omission or misstatement of figures that are not significant enough to influence the decision-making process of users of financial statements.

Expense Recognition Principle

An accounting principle that dictates the timing of reporting an expense, aligning it with the revenue it generates to accurately reflect financial performance.