Table 3-28 Barb and Jim run a business that sets up and tests computers. Assume

Question

Table 3-28 Barb and Jim run a business that sets up and tests computers. Assume that Barb and Jim can switch between setting up and testing computers at table applies. Minutes Needed to Number of Computers Set Up or Tested in a 40-Hour Week Set Up 1 Computer Test 1 Computer mputers Set Up Tested ento OBarb 48 im 30 Refer to Table 3-28. Barb has an absolute advantage in a, both setting up and testing computers and a comparative advantage in setting up computers. o b. both setting up and testing computers and a comparative advantage in testing computers o . I o c. nester setting up nor testing computers and a comparative advantage in setting up computers. o ld. neither setting up nor testing computers and a comparative advantage in testing computers O Type here to

Explanation / Answer

1.

D

Working note:

For Barb, opportunity cost of computer setup = 40/50 = .8 unit of computer tested

For Jim, opportunity cost of computer setup = 60/80 = .75 units of computer tested

Jim has comparative advantage in computer setup due to relatively lower opportunity cost, and Barb has comparative advantage in computer tested.

But, Jim has absolute advantage in computer setup and computer test.

2.

B

Working note:

For Juanita, the opportunity cost of testing one cellular phone = 160/1200 = .133 unit of cellular phone programming

For Shantala, the opportunity cost of testing one cellular phone = 240/600 = .4 unit of cellular phone programming

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