Suppose You Can Type a Paper in Two Hours or Mow

question 226

Multiple Choice

Suppose you can type a paper in two hours or mow the lawn in four hours. It takes your friend Ann eight hours to type a paper of the same length and five hours to mow the same size of lawn. Which of the following is true?

• A) Ann is the high-opportunity cost producer of both typing and mowing.
• B) Since you can type papers and mow lawns faster than Ann, you and Ann cannot benefit from specialization and trade.
• C) You and Ann could expand output and gain from trade if she specialized in mowing lawns and you specialized in typing papers.
• D) You and Ann could expand output and gain from trade if she specialized in typing papers and you specialized in mowing lawns.

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Definitions:

Time-Driven Activity-Based Costing

A costing method that estimates the costs of resources used in business activities, based on the time those activities take and the rate at which resources are consumed.

Customer Service Department

A functional unit within a business that handles customer inquiries, complaints, and facilitates after-sales support.

Capacity Analysis

The evaluation of a business's ability to meet current and future production demands with its existing resources.

Time-Driven Activity-Based Costing

A costing method that assigns costs to products based on the estimated time activities take and the cost of performing those activities.