Scenario: There are two workers in a factory that produces two goods, Good X and Good Y. Worker 1 adds a value of $200 per hour in the production of Good X and a value of $100 per hour in the production of Good Y. Worker 2 adds a value of $125 per hour in the production of Good X and a value of $87.50 per hour in the production of Good Y.
-Refer to the scenario above.Identify the correct statement.

Question

Quizplus · Accepted Answer

Worker 1 adds a higher value of $200 per hour in the production of Good X as compared to Worker 2 who adds $125 per hour. Therefore, Worker 1 is more productive than Worker 2 at producing Good X. The statement in option A is incorrect as Worker 1 adds a value of $100 per hour in the production of Good Y, whereas Worker 2 adds a value of $87.50 per hour. Both workers have different levels of productivity, but Worker 1 is not less productive than Worker 2 at producing Good Y. The statement in option C is incorrect as the opportunity cost is not mentioned in the scenario. Finally, the statement in option D is incorrect as Worker 2 adds a value of $87.50 per hour in the production of Good Y, whereas Worker 1 adds a value of $100 per hour. Therefore, Worker 1 has an absolute advantage in the production of Good Y.

Scenario: There Are Two Workers in a Factory That Produces