Al and Bill are the only workers in a small factory that makes geegaws and doodads.Al can make 6 geegaws per hour or 18 doodads per hour.Bill can make 3 geegaws per hour or 12 doodads per hour.Assuming that neither of them finds one task more odious than the other,

A) Al has a comparative advantage in producing geegaws and Bill has a comparative advantage in producing doodads.
B) Bill has a comparative advantage in producing geegaws and Al has a comparative advantage in producing doodads.
C) Al has a comparative advantage in producing both geegaws and doodads.
D) Bill has a comparative advantage in producing both geegaws and doodads.
E) both have a comparative advantage in producing doodads.

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Matthew Bustamente · Accepted Answer

Final Answer : A, Explanation :  Comparative advantage refers to the ability of a person or a country to produce goods or services at a lower opportunity cost than another person or country. In this case, Al can produce 1 geegaw in 10 minutes (1/6 hour) or 1 doodad in 1/3 hour while Bill can produce 1 geegaw in 20 minutes (1/3 hour) or 1 doodad in 1/4 hour. Therefore, Al has a lower opportunity cost of producing geegaws (in terms of foregone doodads) than Bill, and Bill has a lower opportunity cost of producing doodads (in terms of foregone geegaws) than Al. So, Al has a comparative advantage in producing geegaws and Bill has a comparative advantage in producing doodads.

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