Which of the Following Describes Comparative Advantage

question 339

Multiple Choice

Which of the following describes comparative advantage?

• A) To produce a bushel of wheat Farmer John must give up 2 bushels of corn whereas Farmer Ben must give up 3 bushels of corn.
• B) Company A can produce 4 boxes of cereal in a day whereas Company B can produce 5 boxes of cereal in a day.
• C) Firm A can produce a good at a cost of $3 and Firm B can produce the good at a cost of $4.
• D) Jane can type 50 words per minute and Joe can type 60 words per minute.

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Definitions:

Payment of Account

The process of settling an amount owed to a creditor or vendor, often referred to as making a payment on an account.

Accounts Receivable Turnover

A financial ratio that measures how many times a company collects its average accounts receivable within a period.

Days' Sales in Receivables

A financial metric that calculates the average number of days it takes a company to collect payment after a sale has been made.

Industry Average Turnover

A measure comparing a company's sales or revenues relative to the average of its industry, indicating how efficiently a company is utilizing its assets.