Comparative and Absolute Advantage

Question 1

South Avenue Publishing produces self-help books. The company’s profit is the

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money the company earns after paying all of its production costs.

Question 2

The point of maximum profit is the point at which the marginal cost equals the

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marginal revenue.

Question 3

Brenda’s Boards manufactures skateboards. Each skateboard sells for $45 and includes the following expenses: $3 for the wheels and mounts, $1 for the plastic board, $1 for the paint, and $10 for the labor. What is the total revenue the company makes after selling 10 boards?

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$450

Question 4

What is the best definition of marginal cost?

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the price of producing one additional unit of a good

Question 5

1.00.50.251.25

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.50

Question 6

To generate higher profits, producers must work to

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decrease their production costs.

Question 7

The chart shows the marginal revenue of producing apple pies.According to the chart, the marginal revenue

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remains the same as production increases.

Question 8

What is the difference between profit and revenue?

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Revenue is the total amount producers receive after selling a good. Profit is the total amount producers earn after subtracting the production costs.

Question 9

What is the best definition of marginal revenue?

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the additional income gained from selling an additional good

Question 10

In order to calculate marginal cost, producers must compare the difference in the cost of producing one unit to the cost of

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producing the next unit.

Comparative and Absolute Advantage Answers

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