Refer to the Table Above A)Martha; Martha
B)Julia; Julia
C)Martha; Julia
D)Julia; Martha

question 88

Multiple Choice

Refer to the table above. ______ has the comparative advantage in making pies and ______ the comparative advantage in making cakes. $$\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Time to } \\\text { Make a Pie }\end{array} & \begin{array} { c } \text { Time to } \\\text { Make a Cake }\end{array} \\\hline \text { Martha } & 60 \text { minutes } & 80 \text { minutes } \\\hline \text { Julia } & 50 \text { minutes } & 60 \text { minutes } \\\hline\end{array}$$

• A)Martha; Martha
• B)Julia; Julia
• C)Martha; Julia
• D)Julia; Martha

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Definitions:

Income Elasticity

A measure of how much the quantity demanded of a good responds to a change in consumers' income, holding all other factors constant.

Normal Good

A good for which a rise in income increases the demand for that good—the “normal” case.

Total Revenue

The total income received by a firm from selling its goods or services, calculated as the unit price times the quantity sold.

Elastic Demand

A situation where the demand for a product changes significantly in response to changes in its price.