If Shawn Can Produce Donuts at a Lower Opportunity Cost

question 136

Multiple Choice

If Shawn can produce donuts at a lower opportunity cost than Sue, then

• A) Shawn has a comparative advantage in the production of donuts.
• B) Sue has a comparative advantage in the production of donuts.
• C) Shawn should not produce donuts.
• D) Shawn is capable of producing more donuts than Sue in a given amount of time.

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Definitions:

Interest

The charge for borrowing money or the compensation paid to depositors on their deposits, usually expressed as an annual percentage rate.

Unpaid Balance

The amount of money that is still owed on a loan or credit line that has not yet been paid.

Loan Principal

The amount of money that is borrowed and must be repaid, not including interest or any other charges.

Property Tax Payable

A liability representing taxes due on the property owned by an individual or company, typically paid annually.