Two Persons Each Produce Two Identical Goods

question 209

Multiple Choice

Two persons each produce two identical goods. Which of the following is true about their absolute and comparative advantages in the production of these two goods?

• A) One person can have an absolute advantage in both goods but not a comparative advantage in both goods.
• B) One person can have a comparative advantage in both goods but not an absolute advantage in both goods.
• C) One person can have neither an absolute nor a comparative advantage in either good.
• D) Both persons can always have both an absolute and comparative advantage in both goods.

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Definitions:

Exclusive Agency

A contractual arrangement in which one agent is given the exclusive right to represent a client or a property, typically in the sale of real estate or intellectual property.

Agency Contract

An agreement where one party (the agent) agrees to act on behalf of another (the principal) in business transactions.

Durable Power

A form of power of attorney that remains in effect even if the grantor becomes incapacitated or unable to make decisions.

Arbitration Agreements

Contracts in which parties agree to settle disputes outside of court, through an arbitration process.