Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish.
Which of the following is CORRECT? A) Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit.
B) Homer has a comparative advantage in picking fruit and Teddy has a comparative advantage in catching fish.
C) Homer has a comparative advantage in both catching fish and picking fruit.
D) Teddy has a comparative advantage in both catching fish and picking fruit.
Question 2
Last year, Jack's income was 15,000 and he bought 50 bags of potato chips. This year his income is 18,000 and he buys 55 bags of potato chips. Therefore, Jack's
A) income elasticity of demand for potato chips is 0.52.
B) price elasticity of demand for potato chips is 0.52.
C) income elasticity of demand for potato chips is 1.66.
D) price elasticity of demand for potato chips is 1.66.
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