Two Individuals Engage in the Same Two Productive Activities

question 79

Multiple Choice

Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity?

• A) One individual's production possibilities frontier is steeper than the other individual's production possibilities frontier.
• B) One individual is faster at both activities than the other individual.
• C) One individual's opportunity costs are the same as the other individual's opportunity costs.
• D) None of the above is correct; one of the two individuals always will have a comparative advantage in at least one of the two activities.

---

Definitions:

Useful Life

The estimated period a fixed asset is expected to be useful to the purchasing company, affecting its depreciation calculations.

Total Income

The sum of all revenues and gains earned by a company during a specific period, including sales, interest, dividends, and other sources of income.

Average Rate of Return

Calculates the average annual return on an investment over its lifetime, taking into account both the capital gains and any income received from the investment.

Estimated Average Annual Income

An approximation of the amount of money one is expected to earn on average each year, considering various income sources over a specified period.