Two Friends,Monica and Chandler,enjoy Baking Bread and Making Apple Pies

question 151

Multiple Choice

Two friends,Monica and Chandler,enjoy baking bread and making apple pies.Monica takes two hours to bake 1 loaf of bread and one hour to make 1 pie.Chandler takes four hours to bake 1 loaf of bread and four hours to make 1 pie.
-If Monica and Chandler decide to specialize in order to maximize their combined output,who should produce what?

• A) Chandler should specialize in making pies because he has an absolute advantage.
• B) Monica should specialize in making pies and Chandler should specialize in making bread.
• C) Chandler should specialize in making pies and Monica should specialize in making bread.
• D) Monica should specialize in making bread and pies because she has a comparative advantage in both.
• E) Monica should not specialize because she is better at producing both.

---

Definitions:

Investors

Individuals or institutions that allocate capital to various types of investments with the expectation of earning a financial return.

Dividend Policy

A company's strategy for distributing profits back to its shareholders, which can include the timing, amount, and manner of dividend payments.

Dividend Income

Income received from owning shares in a company, typically paid out of the company's profits.

Capital Gains

The profit made from the sale of an asset, such as stocks or property, which exceeds its original purchase price.