-Agnes Can Produce Either 1 Unit of X or 1

question 292

Multiple Choice

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour.

• A) Brenda has an absolute advantage in the production of X and Y.
• B) Agnes has a comparative advantage in the production of Y.
• C) Brenda has a comparative advantage in the production of X.
• D) Brenda cannot gain from trade.

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Definitions:

Quality Costs

Expenses incurred to prevent, detect, and correct defects in products or services, including costs of warranty and rework.

Appraisal Cost

Expenses associated with the evaluation and inspection of products to ensure quality standards.

Value-added Activity

An operation or process that increases the worth of a product or service, directly contributing to meeting customer requirements.

Essential Value

The inherent or fundamental worth of an asset, product, or service, often considered irrespective of market value or price.