Don Can Produce 10 Pens or 20 Pencils in One

question 12

Multiple Choice

Don can produce 10 pens or 20 pencils in one hour while Bob can produce 5 pencils or 15 pens in one hour.Which of the following statements is correct?

• A)Bob has an absolute advantage over Don in the production of pencils.
• B)Bob has an absolute advantage over Don in the production of pens.
• C)Bob has a comparative advantage over Don in the production of pencils.
• D)Don has a comparative advantage over Bob in the production of pens.
• E)Don does not have a comparative advantage in the production of either good.

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Definitions:

Product Market

The marketplace where final goods or services are offered to consumers, businesses, and the government.

Positive

In economics, referring to factual statements or analyses about how the world is, as opposed to normative statements which are about how the world ought to be.

National Defense

The government activities and measures taken to protect a country and its citizens from external and internal threats, including maintaining armed forces and developing defense strategies.

Positive

Characterized by the presence of something rather than its absence; in economics, often used to describe factual statements or analysis.