Use the Following Scenario to Answer the Next Eight Questions

question 85

Multiple Choice

Use the following scenario to answer the next eight questions:
Rosa and Dirk produce basketballs and footballs. Rosa can produce six basketballs per hour or two footballs per hour. Dirk can produce three basketballs per hour or four footballs per hour.
-Based on the scenario,which of the following is true?

• A) Rosa has an absolute advantage in producing basketballs but not footballs.
• B) Rosa has an absolute advantage in producing footballs but not basketballs.
• C) Rosa has an absolute advantage in producing both goods.
• D) Rosa has an absolute advantage in producing neither good.
• E) Rosa does not have any comparative advantage.

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Definitions:

Gross Profit

The difference between sales revenue and cost of goods sold, indicating how effectively a company generates profit from direct expenses.

Inventory Cost Formula

A method used to determine the cost of an inventory item, including methods such as First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and average cost.

Management

The process of planning, organizing, leading, and controlling an organization's resources to achieve specific goals.

FIFO

"First In, First Out," an inventory valuation method where the oldest inventory items are recorded as sold first.