Homer and Teddy Are Stranded on a Desert Island

question 35

Multiple Choice

Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is CORRECT?

• A) Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit.
• B) Homer has a comparative advantage in picking fruit and Teddy has a comparative advantage in catching fish.
• C) Homer has a comparative advantage in both catching fish and picking fruit.
• D) Teddy has a comparative advantage in both catching fish and picking fruit.

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Definitions:

360-Day Year

An accounting convention used for interest calculations where the year is simplified to 360 days to ease the computation process.

Exact Simple Interest

Interest calculated on the principal amount of a loan or investment, considering the exact number of days in the interest period.

365-Day Year

A standard year length used in some financial calculations, ignoring leap years.

Exact Simple Interest

Interest calculated precisely based on the principal amount, a fixed interest rate, and the number of days between payments.