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:

Break-Even Point

The level of sales or production at which total revenues equal total expenses, resulting in no profit or loss for the business.

Sales

The total amount of goods or services sold by a company within a specific period, generating revenue.

Standard Bikes

Refers to bicycles that adhere to specific industry norms and standards, typically meant for average or typical use scenarios.

Fixed Costs

Costs that do not vary with the level of output or sales over the short term, such as rent or salaries.