Answers Academy - Economics and Personal Finance Unit TestQuestion 3

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Unit Test

Question 3 • Academy - Economics and Personal Finance

Carmen wants to open her own coffee shop. She has narrowed down a list of wholesale retailers and their cost per pound of coffee beans. Whole Sale Company Cost per lb.Café con Leche$8.50Beans Brothers$7.50Colombian Co.$11.25Turkish Coffee Company$6.25Which company has the comparative advantage in cost per pound of coffee?

Answer

A

Café con Leche

B

Beans Brothers

C

Colombian Co.

D

Turkish Coffee Company

Explanation

Compare the cost per pound for each retailer. Turkish Coffee Company charges $6.25 per pound, less than Beans Brothers at $7.50, Café con Leche at $8.50, and Colombian Co. at $11.25. It therefore has the cost advantage: Turkish Coffee Company.

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