Mike Can Wash a Car in 5 Minutes and Wax

question 149

Multiple Choice

Mike can wash a car in 5 minutes and wax a car in 15 minutes. Tony can wash a car in 10 minutes and wax a car in 20 minutes. Which of the following is true?

• A)​Mike can wash a car faster and has comparative advantage in washing cars.
• B)​Mike can wax a car faster and has comparative advantage in waxing cars.
• C)​Tony can wash a car faster and has comparative advantage in washing cars.
• D)​Tony can wax a car faster and has comparative advantage in waxing cars.

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Definitions:

Market Power

The ability of a company or entity to control prices or exclude competition in a particular market.

Bid Rigging

An illegal agreement between parties to conspire to fix the outcomes of bidding processes to benefit all involved parties unfairly.

Predatory Pricing

The practice of selling a product or service at a very low price with the intent of driving competitors out of the market or creating barriers to entry for potential new competitors.

Meeting-The-Competition Defense

A legal defense allowing a business to justify certain behaviors, such as price fixing, by proving they were necessary to meet a competitor's prices.