Use the Following Scenario to Answer the Next Four Questions

question 33

Multiple Choice

Use the following scenario to answer the next four questions:
RayRay and Andrew produce baseballs and golf balls. RayRay can produce six baseballs per hour or four golf balls per hour. Andrew can produce three baseballs per hour or one golf ball per hour.
-Based on the scenario,which of the following is true?

• A) RayRay has a comparative advantage in producing baseballs but not golf balls.
• B) RayRay has a comparative advantage in producing golf balls but not baseballs.
• C) RayRay has a comparative advantage in producing both goods.
• D) RayRay has a comparative advantage in producing neither good.
• E) RayRay does not have any absolute advantage.

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Definitions:

Wages

Wages are payments made to employees for their labor or services, typically calculated on an hourly, daily, or piecework basis.

Workweek

A recurring period of seven consecutive days designated for work, usually comprised of Monday through Friday.

Balance Sheet

A financial statement that provides a snapshot of a company’s financial condition at a specific point in time, showing assets, liabilities, and shareholders’ equity.

Annual Depreciation

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value due to wear and tear.