What is the cost per dollar of net output for each company?Which company has the comparative advantage?What is the value of the comparative advantage? McDonald's($Millions)27,44115,4462,48831,534RevenuesCost of Goods Sold (Materials)Wages and SalariesCapital EmployedInterest Rate (Opportunity Cost of Capital) = 5.0%Wendy's($Millions)2,0611,4002743,806

Comparative advantage refers to a situation in which one entity can produce a particular good or…

Answered: McDonald's ($Millions) 27,441 15,446…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What is the cost per dollar of net output for each company?

Which company has the comparative advantage?

What is the value of the comparative advantage?

McDonald's
($Millions)
27,441
15,446
2,488
31,534
Revenues
Cost of Goods Sold (Materials)
Wages and Salaries
Capital Employed
Interest Rate (Opportunity Cost of Capital) = 5.0%
Wendy's
($Millions)
2,061
1,400
274
3,806

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

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