Suppose an American Worker Can Make 20 Pairs of Shoes

question 118

Multiple Choice

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day.On the other hand,a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day.Which of the following statements is true?

• A) The United States has the absolute advantage in the production of both shoes and apples.
• B) Canada has the absolute advantage in the production of both shoes and apples.
• C) The United States has the absolute advantage in the production of shoes and Canada has the absolute advantage in the production of apples.
• D) Canada has the absolute advantage in the production of shoes and the United States has the absolute advantage in the production of apples.

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Definitions:

Marginal Social Cost

An increased charge to the general public for the creation of one more unit of a product or service.

Pollution

The presence in or introduction into the environment of a substance or thing that has harmful or poisonous effects.

Marginal Social Benefit

The additional benefit society gains from consuming one more unit of a good or service.

Marginal Social Cost

The additional cost imposed on society as a whole by producing one extra unit of a good or service.