Karl Can Produce Either 10 Tons of Oranges or 5

question 87

Multiple Choice

Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples. Which of the following is true in this case?

• A)Adam has an absolute advantage in oranges.
• B)Karl has a comparative advantage in apples.
• C)Karl has an absolute advantage in oranges.
• D)Karl has an absolute advantage in apples.
• E)Adam has a comparative advantage in oranges.

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Definitions:

Factory Overhead

The indirect costs associated with manufacturing, including utilities, maintenance, and management salaries, but not including raw materials or direct labor.

Work in Process

Inventory that includes materials that have been partially processed but are not yet finished goods in the manufacturing process.

Finished Goods

Products that have completed the manufacturing process but have not yet been sold to customers.

Finished Goods Account

An account representing the total value of all completed products available for sale at the end of an accounting period.