Use the Following Scenario to Answer the Questions That Follow

question 142

Multiple Choice

Use the following scenario to answer the questions that follow.
Amy can produce either 5,000 pounds of cheese or 20 houses per year. Jim can produce either 5,000 pounds of cheese or 10 houses per year.
-By the principle of comparative advantage,Amy should specialize in producing:

• A) both cheese and houses.
• B) cheese.
• C) houses.
• D) neither cheese nor houses.
• E) a little of both goods.

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Definitions:

80/20 Principle

A rule suggesting that 80% of outcomes result from 20% of all causes for any given event.

Key Accounts

Large, significant customers that contribute a substantial portion of a company's revenue.

Undifferentiated

Marketing strategy that targets a broad market with a generic message and product, ignoring segment differences.

Break-even

The point at which total costs and total revenues are equal, resulting in no net loss or gain for a business.