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If Company a Is Better Than Company B at Both

Question 9

Multiple Choice

If company A is better than company B at both producing T-shirts and at selling them retail, why might company A contract the first job to company B?


A) Company B has an absolute advantage at producing T-shirts.
B) Company A believes it will benefit from future competition.
C) There is no reason for company to contract out the work.
D) Company B has a comparative advantage at producing T-shirts.

Correct Answer:

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