Tom and Jerry Have Two Tasks to Do All Day

question 100

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.Jerry has a comparative advantage in:

• A) dish production because he has the lower opportunity cost of a dishes.
• B) dish production because he has the higher opportunity cost of a dishes.
• C) fence production because he has the lower opportunity cost of a fence.
• D) fence production because he has the higher opportunity cost of a fence.

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Definitions:

Paradox Of Thrift

The economic theory that personal savings can be detrimental to overall economic growth if too high, as they may reduce overall demand.

Great Recession

A severe global economic recession that occurred from late 2007 through mid-2009, characterized by widespread financial crisis, high unemployment, and significant drops in the economic activity.

High Inflation

A situation where prices for goods and services rise rapidly over a period, eroding purchasing power and potentially destabilizing the economy.

Crowding-Out Effect

Large federal budget deficits are financed by Treasury borrowing, which then crowds private borrowers out of financial markets and drives up interest rates.