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:

Growth Rate

Growth rate signifies the percentage change of a specific variable within a specific time period, often used to indicate the expansion of a company's revenue or profit.

Risk-Free Rate

The theoretical rate of return on an investment with zero risk, often represented by the yield on government bonds.

Market Portfolio

A theoretical portfolio that includes all assets available in the market, with each asset weighted by its market capitalization.

Beta

A benchmark for evaluating the volatility or systematic risk of a security or portfolio vis-à-vis the wider market.