Explain How It Is Possible for One of Two People

question 72

Essay

Explain how it is possible for one of two people in a two-good economy to have an absolute advantage in producing both goods,but trade can still benefit both people.

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Definitions:

Machine-Hours

A measure of production time that quantifies the number of hours machines are operated in the manufacturing process.

Forming

In the context of manufacturing, forming refers to the process of shaping materials into desired shapes through various methods, such as molding, casting, or stamping.

Customizing

The process of making or altering something according to the user's specific needs or preferences.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including but not limited to utilities, maintenance, and salaries of non-direct labor.