Sean Can Build Sandboxes Twice as Fast as Matt

question 125

Multiple Choice

Sean can build sandboxes twice as fast as Matt. Sean can assemble swing sets three times as fast as Matt. The law of comparative advantage suggests that

• A) Sean can gain only at Matt's expense.
• B) Matt can gain only at Sean's expense.
• C) both can gain if Sean specializes in assembling swing sets and Matt in building sandboxes.
• D) both can gain if Sean specializes in building sandboxes and Matt in assembling swing sets.

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Definitions:

Switching Costs

Expenses that a consumer or company incurs as a result of changing from one product, service, supplier, or system to another.

Supplier Power

The level of control and influence that suppliers have over the price and availability of their products or services in the market.

Non-Critical Inputs

Components or materials that are not essential to the core function or operation of a product or process.

Homogenous Inputs

Inputs or resources that are identical in quality and nature, making them interchangeable in production processes.