Tom and Jerry Have Two Tasks to Do All Day

question 76

Multiple Choice

Tom and Jerry have two tasks to do all day: make dishes and build fences.If Tom spends all day making dishes,he will have make 16 dishes.If he instead devotes his day to building fences,Tom will build 4 fences.If Jerry spends his day making dishes,he will make 14 dishes; if he spends the day building fences,he will build 7 fences.Because Tom has a ____________ opportunity cost for one fence compared to Jerry,we know Tom has _________________________.

• A) higher; the comparative advantage in fence production
• B) lower; the comparative advantage in fence production
• C) similar; no advantage in production of either good
• D) higher; the comparative advantage in dish production

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Definitions:

Formalization

The extent to which an organization's policies, procedures, job descriptions, and rules are written and explicitly articulated.

Creativity

The ability to produce original and valuable ideas or solutions.

Centralization

The degree to which decisions are made at the top of the organization.

Simple Structure

A centralized form of organization that emphasizes a small technical and support staff, strong centralization of decision-making in the upper echelon, and a minimal middle level.