In One Hour John Can Produce 20 Loaves of Bread

question 259

Multiple Choice

In one hour John can produce 20 loaves of bread or 16 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

• A) Phyllis has a comparative advantage in producing bread.
• B) John has a comparative advantage in producing cakes.
• C) Phyllis has an absolute advantage in both goods.
• D) John has an absolute advantage in both goods.
• E) Phyllis has a comparative advantage in producing both cakes and bread.

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Definitions:

Periodic Inventory Method

A method of inventory valuation for financial reporting purposes where a physical count of the inventory is performed at specific intervals; costs of goods sold are calculated at the end of the accounting period.