(Exhibit: Determining Comparative Advantage) Eric Has a Lower Opportunity Cost

question 38

Multiple Choice

(Exhibit: Determining Comparative Advantage) Eric has a lower opportunity cost for:
$\begin{array}{|l|l|l|}\hline & \text { Opportunity Cost of 1 Bread } & \text { Opportunity Cost of } 1 \text { Cake } \\\hline \text { Eric ( } 4 \text { loaves of bread }=2 \text { cakes }) & 1 / 2 \text { of a cake } & 2 \text { loaves of bread } \\\hline \text { Daisy }(5 \text { loaves of bread }=3 \text { cakes }) & 3 / 5 \text { of a cake } & 12 / 3 \text { loaves of bread } \\\hline\end{array}$

• A) baking bread.
• B) baking a cake.
• C) neither bread nor cake.
• D) both bread and cake.

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Definitions:

Budget Line

A graph depicting all possible combinations of two goods that a consumer can afford given their income and the prices of the goods.

State Sales Taxes

Taxes imposed by state governments on the sale of goods and services within their jurisdiction.

Tax Policy

Guidelines and laws governing how taxes are structured, collected, and managed by a government to influence economic activity.

Budget Line

A graphical representation of all possible combinations of two goods that a consumer can afford with their income level.