If Robin Has an Absolute Advantage in Both Gardening and Baking

question 58

Multiple Choice

If Robin has an absolute advantage in both gardening and baking when compared to Robert, then

• A)Robin cannot benefit by trading with Robert
• B)Robin can benefit by specializing in gardening if Robert specializes in baking
• C)Robin can benefit by specializing in baking if Robert specializes in gardening
• D)Robin and Robert may benefit from trading, but there is insufficient information to determine who should specialize in what
• E)neither Robin nor Robert can benefit from trading with the other

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Definitions:

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully equivalent units.

Weighted Average Method

A cost accounting method used to calculate the cost of goods sold and ending inventory by taking into account the weighted average of all inventory costs.

Job Order Cost Accounting

An accounting method that accumulates and assigns costs to specific products or projects based on individual job orders.

Equivalent Units

A concept used in cost accounting to convert partially completed goods into a number of complete units of output.