Bob and Doug spend their workdays making beer and donuts. Bob's Opportunity Cost of producing a unit of donuts is 0.8 units of beer; Doug's Opportunity Cost of producing a unit of donuts is 0.25 units of beer. From this information alone, we know that A. B. C. D. Doug has an Absolute Advantage in the production of donuts and Bob has an Absolute Advantage in the production of beer. Doug has a Comparative Advantage in the production of both donuts and beer. Bob's Opportunity Cost of producing a unit of beer is 1.25 units of donuts and Doug's Opportunity Cost of producing a unit of beer is 4 units of donuts. None of the above answers are correct.

Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter2: Thinking Like An Economist
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Bob and Doug spend their workdays making beer and donuts. Bob's Opportunity Cost of producing a unit of donuts
is 0.8 units of beer; Doug's Opportunity Cost of producing a unit of donuts is 0.25 units of beer. From this
information alone, we know that
A.
B.
C.
D.
Doug has an Absolute Advantage in the production of donuts and Bob has an Absolute Advantage in the
production of beer.
Doug has a Comparative Advantage in the production of both donuts and beer.
Bob's Opportunity Cost of producing a unit of beer is 1.25 units of donuts and Doug's Opportunity Cost of
producing a unit of beer is 4 units of donuts.
None of the above answers are correct.
Transcribed Image Text:Bob and Doug spend their workdays making beer and donuts. Bob's Opportunity Cost of producing a unit of donuts is 0.8 units of beer; Doug's Opportunity Cost of producing a unit of donuts is 0.25 units of beer. From this information alone, we know that A. B. C. D. Doug has an Absolute Advantage in the production of donuts and Bob has an Absolute Advantage in the production of beer. Doug has a Comparative Advantage in the production of both donuts and beer. Bob's Opportunity Cost of producing a unit of beer is 1.25 units of donuts and Doug's Opportunity Cost of producing a unit of beer is 4 units of donuts. None of the above answers are correct.
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