If Monica Has a Comparative Advantage in Baking and George

question 101

Multiple Choice

If Monica has a comparative advantage in baking and George has a comparative advantage in sewing, then

• A)Monica must have an absolute advantage in baking
• B)Monica must have an absolute advantage in sewing
• C)George must have an absolute advantage in baking
• D)George must have an absolute advantage in sewing
• E)we can conclude nothing about absolute advantage

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Definitions:

Joint Venture

Involves the joining together of parts of companies to accomplish specific, limited objectives. Joint ventures are controlled by the combined management of the two (or more) parent companies.

Independent Companies

Firms that operate independently without being owned or controlled by another entity or conglomerate.

Specific Objective

A clearly defined and measurable goal that an organization or individual aims to achieve.

Resources

Assets or inputs used to produce goods and services, including natural, human, and capital resources.