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Use the Following Scenario to Answer the Next Eight Questions

Question 61

Multiple Choice

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) Pete has an absolute advantage in producing cars but not trucks.
B) Pete has an absolute advantage in producing trucks but not cars.
C) Pete has an absolute advantage in producing both goods.
D) Pete has an absolute advantage in producing neither good.
E) Karl has a comparative advantage in producing both goods.

Correct Answer:

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