The Tables Give Production Possibilities Data for Two Countries, Alpha

question 252

Multiple Choice

The tables give production possibilities data for two countries, Alpha and Beta, which have populations of equal size. The given data show that

• A)Beta has a comparative advantage in producing chips.
• B)Alpha has a comparative advantage in catching fish.
• C)Alpha is subject to constant costs and Beta is subject to increasing costs.
• D)Beta is more efficient than Alpha both in catching fish and in producing chips.

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Definitions:

Standard Cost System

An accounting method that uses standard costs for direct materials, labor, and overhead to assess performance and control costs.

Price Variance

The difference between the actual price paid for a good or service and its expected price, often analyzed in budgeting and cost management.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected for the actual production level, multiplied by the standard labor rate.

Direct Materials

The raw materials that are directly traceable to a finished product and are an integral part of the finished product.