Figure 3-2 -Refer to Figure 3-2. What Do the Two Producers Have

question 9

Multiple Choice

Figure 3-2
-Refer to Figure 3-2. What do the two producers have an absolute or comparative advantage in?

• A) Paul has a comparative advantage in both wheat and corn.
• B) Paul has an absolute advantage in wheat, and Cliff has a comparative advantage in corn.
• C) Cliff has a comparative advantage in wheat, and Paul has a comparative advantage in corn.
• D) Cliff has a comparative advantage in both wheat and corn.

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Definitions:

Wage Rate

A set amount of money given by an employer to an employee for services rendered, usually specified on an hourly or annual basis.

Purely Competitive

A market structure characterized by many buyers and sellers, free entry and exit, and a product so standard that no one controls the market price.

Imperfectly Competitive

A market structure characterized by a few dominant firms that have control over prices and high barriers to entry, limiting perfect competition.

Marginal Product

The increase in output that results from a one-unit increase in the quantity of a single input, keeping all other inputs constant.