Which Statement Best Describes Absolute Advantage

question 124

Multiple Choice

Which statement best describes absolute advantage?

• A) DiNozzo has an absolute advantage in the production of wooden boats.
• B) DiNozzo has an absolute advantage in both.
• C) Gibbs has an absolute advantage in solving crimes,whereas DiNozzo has an absolute advantage in making wooden boats.
• D) Gibbs has an absolute advantage in both.
• E) Gibbs has an absolute advantage in making wooden boats,whereas DiNozzo has an absolute advantage in solving crimes.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales activities within a short time frame, such as rent, salaries, and insurance.

Variable Cost

Charges that adjust in accordance with the quantity of production or the scale of sales.

Incremental Profit

The additional profit derived from a specific business decision, comparing the profit levels before and after the decision.

Selling Price

The amount at which a product or service is sold to customers.