Use the Production Possibilities Data Below for Avokia and Baldonia

question 161

Multiple Choice

Use the production possibilities data below for Avokia and Baldonia to answer the following question(s) .
Table 2-2
Refer to Table 2-2. Which of the following is correct?

• A) Avokia has the comparative advantage in both goods.
• B) Baldonia has the comparative advantage in oranges.
• C) Avokia has the comparative advantage in oranges.
• D) It would be impossible for Avokia and Baldonia to gain from trade.

---

Definitions:

Mark-up

The amount added to the cost price of goods to cover overhead and profit.

Eliminate

The process of removing or getting rid of something.

Contribution Margin

The amount remaining from sales revenue after all variable costs have been deducted, indicating how much revenue is contributing to covering fixed costs and generating profit.

Machine Set-ups

The arrangements and adjustments made to machinery to prepare it for a production run.