Alice and Gene Work in the Mailroom,sorting and Delivering Mail

question 98

Multiple Choice

Alice and Gene work in the mailroom,sorting and delivering mail.In order for them to benefit from specialization and trade,Alice must

• A) be able to both sort and deliver faster than Gene.
• B) be equally productive in both sorting and delivering.
• C) have a comparative advantage in both sorting and delivering.
• D) have a comparative advantage in one task and Gene must have a comparative advantage in the other task.
• E) be equally productive as Gene in both sorting and delivering.

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Definitions:

Wage Rate

The wage rate is the amount of compensation a worker receives per unit of time worked, often expressed per hour or per year.

Marginal Revenue Product

The extra revenue generated by employing one additional unit of a resource, such as labor or capital.

Diminishing Marginal Returns

A principle stating that after an optimal point, further increases in one input while holding others constant will result in smaller and smaller gains in output.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a variable input.