Figure 3-4 -Refer to Figure 3-4. What Does Each of the Two

question 117

Multiple Choice

Figure 3-4
-Refer to Figure 3-4. What does each of the two producers have a comparative or absolute advantage in?

• A) Ben has an absolute advantage in wine, and Jerry has a comparative advantage in neither good.
• B) Ben has an absolute advantage in both goods, and Jerry has a comparative advantage in beer.
• C) Ben has an absolute advantage in wine, and Jerry has a comparative advantage in beer.
• D) Ben has an absolute advantage in beer, and Jerry has a comparative advantage in wine.

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Definitions:

Variable Costs

Expenses that vary directly with the volume of production or the degree of activity within a company.

Fixed Costs

Costs that do not vary with the volume of production or level of activity within a certain range. These are expenses that must be paid regardless of business activity, such as rent or salaries.

Required Return

The minimum expected yield by investors as compensation for the level of risk associated with an investment.

Initial Investment

The amount of money used to start a project, business, or investment.