Use the following scenario to answer the next eight questions:
Karl and Pete produce cars and trucks. Karl can produce 10 cars per hour or 5 trucks per hour. Pete can produce 12 cars per hour or 4 trucks per hour.
-Based on the scenario,which of the following is true?
A) Karl has an absolute advantage in producing cars but not trucks.
B) Karl has an absolute advantage in producing trucks but not cars.
C) Karl has an absolute advantage in producing both goods.
D) Karl has an absolute advantage in producing neither good.
E) Karl does not have any comparative advantage.
Correct Answer:
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