Suppose That Penn's Opportunity Cost of Producing an Extra Pepsi

question 79

Multiple Choice

Suppose that Penn's opportunity cost of producing an extra Pepsi is 3 cheeseburgers while Teller's opportunity cost is 0.14 cheeseburgers.One could predict that

• A) Penn must have an absolute advantage in producing cheeseburgers.
• B) Teller must have an absolute advantage in producing Pepsis.
• C) they have little to gain from specialization and coordinating production.
• D) Teller has a comparative advantage in cheeseburger production.
• E) they have potentially much to gain from specialization and coordinating production.

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Definitions:

Maximum Profit Equilibrium

The point at which a firm achieves its highest level of profit given its production and cost constraints.

Price Labor

The cost associated with hiring workers or the wage that employers pay to their employees for their labor.

ATMs

Automated Teller Machines, devices that allow bank customers to perform financial transactions without the need for a branch representative.

Bank Tellers

Employees of a bank who deal directly with customers, handling transactions, cash checks, accept deposits, and provide account information.