Consider the Following Household

question 20

Multiple Choice

Consider the following household.In 5 hours,Bob can cook 5 meals or clean 6 rooms.In 5 hours,Mary can cook 30 meals or clean 10 rooms.Select the best statement.

• A)Bob has an absolute advantage in the production of both goods.
• B)Since Mary is better at producing both goods,she should produce both.
• C)Bob has a comparative advantage in cooking.
• D)Mary has a comparative advantage in cooking.
• E)Mary has a comparative advantage in cooking and cleaning.

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Definitions:

Market Price

The present rate at which a service or asset is available for purchase or sale in the market.

Perfectly Competitive

A market structure where many firms offer a homogeneous product, there are no barriers to entry or exit, and every company is a price taker.

Total Cost

The total expense of manufacturing, comprising both constant and fluctuating costs.

Market Price

The cost at which a product or service is made available in the market, dictated by the forces of supply and demand.