Papa Ray owns a pizzeria. He is more efficient at making pizza ...

[c0205847]

Papa Ray owns a pizzeria. He is more efficient at making pizza than anyone he could hire. Does this mean that he should make all of the pizzas himself?
 
  What will be an ideal response?

Question 2

When the aggregate demand curve and the short-run aggregate supply curve intersect,
 
  A) the economy is in short-run macroeconomic equilibrium.
  B) inflation must be increasing.
  C) structural and frictional unemployment equal zero.
  D) the long-run aggregate supply curve must also intersect at the same point.

[jessicaduplan]

Answer to Question 1

No. This simply means that Papa Ray has an absolute advantage in making pizza. This does not mean that he has a comparative advantage in making pizza. It is possible that the opportunity cost of his time is high (he could be out selling franchises, for example).

Answer to Question 2

A

[c0205847]

Gracias!

[dyrone]

Excellent