Suppose an American Worker Can Make 50 Pairs of Gloves

question 11

Multiple Choice

Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day.On the other hand,a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day.Using the concepts of absolute and comparative advantage,we can say that the United States has the comparative advantage in:

• A) the production of both gloves and radishes.
• B) neither the production of gloves nor radishes.
• C) the production of gloves only.
• D) the production of radishes only.

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Definitions:

Risk-Averse

A descriptive term for an individual or entity that prefers to avoid risk and chooses certainty over uncertainty when making investment or financial decisions.

Insurance Premium

The amount of money that individuals or businesses must pay for an insurance policy, providing coverage against specific risks.

Expected Claims

An estimation of the amount and frequency of claims a company might expect within a certain period, often used in insurance and risk management.

Marginal Utility

is the additional satisfaction or utility a consumer receives from consuming an additional unit of a good or service.