If Wendy Can Produce More of All Goods Than Tommy

question 43

Multiple Choice

If Wendy can produce more of all goods than Tommy in an hour,then

• A) Wendy has an absolute advantage in all goods.
• B) Wendy does not need to trade with Tommy in order to achieve the gains from trade.
• C) Wendy has a comparative advantage in all goods.
• D) Tommy has an absolute advantage in all goods.
• E) Only Tommy but not Wendy can benefit from trade between the two of them.

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Definitions:

Cooperative

An organization formed by individuals to market new products. Individuals in a cooperative pool their resources together to gain an advantage in the market.

Shareholder

An investor who holds stock in a corporation, and thus is an owner of the corporation.

Leasehold Estates

Leasehold estates represent a tenant's right to occupy or use real property for a specific period of time, as defined by a lease agreement.

Possessory Interest

A legal right to occupy or control property, irrespective of ownership.