Asked by Javier Lopez on Jul 11, 2024
Verified
If Monica has a comparative advantage in baking and George has a comparative advantage in sewing,then:
A) Monica must have an absolute advantage in baking.
B) Monica must have an absolute advantage in sewing.
C) George must have an absolute advantage in baking.
D) George must have an absolute advantage in sewing.
E) we can conclude nothing about absolute advantage.
Comparative Advantage
The ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another.
Absolute Advantage
The ability of a country or entity to produce a good or service more efficiently than its competitors.
- Identify the distinctions between absolute advantage and comparative advantage.
Verified Answer
SS
Stephen SawyerJul 13, 2024
Final Answer :
E
Explanation :
Comparative advantage refers to the ability of an individual or entity to produce a good or service at a lower opportunity cost than another individual or entity. It does not necessarily indicate who has an absolute advantage in any given activity. Therefore, we cannot conclude anything about absolute advantage based solely on the information provided.
Learning Objectives
- Identify the distinctions between absolute advantage and comparative advantage.