Table 2-17 Table 2-17 Shows the Output Per Week of Week

question 465

Multiple Choice

Table 2-17
Table 2-17 shows the output per week of two people, James and Lucy. They can either devote their time to making wagons or making tricycles.
-Refer to Table 2-17. Which of the following statements is true?

• A) Lucy has an absolute advantage in making both products.
• B) James has an absolute advantage in making both products.
• C) Lucy has an absolute advantage in making wagons and James in making tricycles.
• D) James has an absolute advantage in making tricycles and Lucy in making wagons.

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Definitions:

Contribution Margin

Contribution Margin represents the portion of sales revenue that is not consumed by variable costs and contributes to covering fixed costs.

Machine Minutes

A measurement of time expressing the operation of a machine in minutes.

Unlimited Demand

A theoretical concept where there is no upper limit to the quantity of a good or service that consumers wish to purchase, at a zero price point.

Materials Costs

The cost of raw materials used in the production of goods, a major component of the total manufacturing cost.