Use the Following Scenario to Answer the Questions That Follow

question 78

Multiple Choice

Use the following scenario to answer the questions that follow.
Amy can produce either 5,000 pounds of cheese or 20 houses per year. Jim can produce either 5,000 pounds of cheese or 10 houses per year.
-By the principle of comparative advantage,Jim should specialize in producing:

• A) both cheese and houses.
• B) cheese.
• C) houses.
• D) neither cheese nor houses.
• E) a little of both goods.

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Definitions:

Line Structure

The simplest form of organizational structure that direct lines of authority flow from top management to individual employees, establishing a clear hierarchy.

Knowledge and Skills

The theoretical understanding (knowledge) and practical capabilities (skills) that individuals possess, which enable them to perform tasks effectively.