-Huey and Steve Can Grow Potatoes or Tomatoes

question 167

Multiple Choice

-Huey and Steve can grow potatoes or tomatoes.The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week.Based on the table,Steve has a comparative advantage in

• A) both potatoes and tomatoes.
• B) neither potatoes nor tomatoes.
• C) potatoes.
• D) tomatoes.
• E) More information is needed about Huey's comparative advantage in order to determine Steve's comparative advantage.

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Definitions:

Direct Labor

Refers to the wages or salaries paid to employees directly involved in the production of goods or services.

Direct Materials

Raw materials that can be directly linked to the production of a specific product.

Fixed Overhead

Regular, ongoing expenses that are not affected by changes in production level or output, such as rent and insurance.

Variable Overhead

Costs that change in proportion to the level of production activity or volume, such as power for manufacturing equipment.