Al and Bill Are the Only Workers in a Small

question 15

Multiple Choice

Al and Bill are the only workers in a small factory which makes geegaws and doodads.Al can make 4 geegaws per hour or 12 doodads per hour.Bill can make 2 geegaws per hour or 8 doodads per hour.Assuming that neither of them finds one task more odious than the other,

• A)Al has a comparative advantage in producing geegaws and Bill has a comparative advantage in producing doodads.
• B)Bill has a comparative advantage in producing geegaws and Al has a comparative advantage in producing doodads.
• C)Al has a comparative advantage in producing both geegaws and doodads.
• D)Bill has a comparative advantage in producing both geegaws and doodads.
• E)both have a comparative advantage in producing doodads.

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Definitions:

Social Security

A government system that provides financial assistance to people with an inadequate or no income, particularly in retirement, disability, or survivorship.

Wage Limitation

A cap on the amount of wages that can be considered for certain tax calculations or benefits, such as Social Security taxes.

Standard Deduction

A fixed dollar amount that reduces the income on which you are taxed, varying by filing status and adjusted annually for inflation.

Dependent

A person who relies on another, especially a family member, for financial support and qualifies for potential tax benefits.