Suppose It Takes Dan 5 Minutes to Make a Sandwich

question 93

Multiple Choice

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. Which of the following statements is correct?

• A)Dan has the comparative advantage in smoothies, but Tracy has the absolute advantage in smoothies.
• B)Dan has the comparative and absolute advantage in sandwiches.
• C)Dan has the comparative and absolute advantage in smoothies.
• D)Dan has the comparative advantage in sandwiches, but Tracy has the absolute advantage in sandwiches.

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Definitions:

Borrowing Increases

The act of increasing the amount of money borrowed, which typically leads to higher debt levels and potentially increased interest expenses.

Purchase Price

The amount paid to buy a good, service, or financial asset.

Off-Balance Sheet Lease Financing

Off-balance sheet lease financing involves leasing arrangements that are not recorded on a company's balance sheet, potentially making a company's financial condition appear stronger than it actually is.

Debt Ratio

A metric assessing a firm's leverage, determined by dividing its total liabilities by its total assets.