Which Statement Best Describes the Absolute Advantage as Shown in the Graphs

question 53

Multiple Choice

Which statement best describes the absolute advantage as shown in the graphs?

• A) Pam has an absolute advantage in the production of both.
• B) Jim has an absolute advantage in the production of both.
• C) Jim has an absolute advantage in the production of pizzas, and Pam has an absolute advantage in the production of stromboli.
• D) Pam has an absolute advantage in the production of pizzas, and Jim has an absolute advantage in the production of stromboli.
• E) They both have an absolute advantage in the production of stromboli.

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Definitions:

Absolute Advantage

The ability of a country or entity to produce a good or service in a more efficient manner (with fewer resources or in less time) than other countries or entities.

Opportunity Cost of Production

The value of the best alternative use of resources that could have been used for producing something else.

Labor Cost

Represents the total expenses incurred by employers to compensate their workforce, including wages, benefits, and taxes.

Ad Valorem Tariffs

A type of tariff calculated as a percentage of the value of the imported goods, as opposed to a fixed fee per unit.