Mike Can Wash a Car in 5 Minutes and Wax

question 149

Multiple Choice

Mike can wash a car in 5 minutes and wax a car in 15 minutes. Tony can wash a car in 10 minutes and wax a car in 20 minutes. Which of the following is true?

• A)​Mike can wash a car faster and has comparative advantage in washing cars.
• B)​Mike can wax a car faster and has comparative advantage in waxing cars.
• C)​Tony can wash a car faster and has comparative advantage in washing cars.
• D)​Tony can wax a car faster and has comparative advantage in waxing cars.

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Definitions:

Standby Underwriting

A type of underwriting where the underwriter agrees to buy any remaining shares not sold in a public offering, ensuring the issuing company sells all shares.

Underwriting

The process by which insurers, lenders, or investment bankers evaluate and take on the financial risk of a client, based on an assessment of that client's risk profile.

Market Price

The ongoing market cost for the purchase or sale of a service or asset.

Net Present Values

Net Present Values is the plural form of Net Present Value, referring to the calculation that determines the sum of the present values of all future cash flows associated with an investment, less the initial investment cost.