Al and Bill Are the Only Workers in a Small

question 7

Multiple Choice

Al and Bill are the only workers in a small factory that makes geegaws and doodads.Al can make 7 geegaws per hour or 21 doodads per hour.Bill can make 4 geegaws per hour or 8 doodads per hour.Assuming that neither of them finds one task more odious than the other,

• A)Al has a comparative advantage in producing geegaws and Bill has a comparative advantage in producing doodads.
• B)Bill has a comparative advantage in producing both geegaws and doodads.
• C)Al has a comparative advantage in producing both geegaws and doodads.
• D)Bill has a comparative advantage in producing geegaws and Al has a comparative advantage in producing doodads.
• E)both have a comparative advantage in producing doodads.

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Definitions:

Common Shareholders' Equity

The portion of a company's equity that is attributable to common shares, representing the residual interest in the net assets of the company.

Return on Assets

A profitability ratio that measures how efficiently a company uses its assets to generate profit, calculated by dividing net income by total assets.

Debt to Total Assets

A financial ratio that shows the proportion of a company's assets that are financed through debt.

Basic Earnings per Share

A measure of a company's profitability, calculated by dividing net income by the number of outstanding common shares.