Hank Requires 1 Hour to Cut the Grass and 3

question 61

Multiple Choice

Hank requires 1 hour to cut the grass and 3 hours to clean the house.His sister Holly requires 1 hour to cut the grass and 4 hours to clean the house.Which of the following statements is true?

• A) Hank has a comparative advantage in both cutting the grass and cleaning the house.
• B) Hank and Holly both have a comparative advantage in cutting the grass.
• C) Hank has a lower opportunity cost of cutting the grass.
• D) Hank has an absolute advantage in both cutting the grass and cleaning the house.
• E) Holly has a comparative advantage in cutting the grass.

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Definitions:

First-In, First-Out Method

An accounting method for valuing inventory that assumes goods are sold in the order in which they are purchased or produced.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, treated as if they were whole units.

Assembly Department

A section within a manufacturing facility where components are assembled together to create a finished product.

First-In, First-Out Method

An inventory valuation method in which the goods first purchased or produced are the first to be used or sold.