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.

---

Definitions:

Trade Embargoes

Government-imposed restrictions on the exchange of goods and services with a particular country or group of countries.

USMCA

The United States-Mexico-Canada Agreement, a free trade agreement between these three countries that replaced NAFTA.

NAFTA

The North American Free Trade Agreement is a treaty between Canada, Mexico, and the United States that eliminated most tariffs on trade between these nations, aiming to increase economic integration.

Trade Agreement

A treaty between two or more countries to outline how they will work together to ensure mutual benefit in trade, often involving tariff reductions, import quotas, and other trade incentives.