Multiple Choice
Who has the absolute advantage in making fresh squeezed orange juice?
2. Introductory Economic Models
PPF - Comparative Advantage and Absolute Advantage
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Who has the absolute advantage in making scrambled eggs?
A
Joe
B
Carla
C
No one
Verified step by step guidance1
Identify the concept of absolute advantage, which refers to the ability of an individual or group to produce a good or service more efficiently than another individual or group.
Examine the production possibility frontiers (PPFs) for Joe and Carla. The PPFs show the trade-off between producing fresh squeezed orange juice and scrambled eggs.
For Joe, observe the endpoints of the PPF: Joe can produce either 4 units of fresh squeezed orange juice or 4 units of scrambled eggs.
For Carla, observe the endpoints of the PPF: Carla can produce either 4 units of fresh squeezed orange juice or 4 units of scrambled eggs.
Since both Joe and Carla can produce the same maximum quantity of scrambled eggs (4 units), neither has an absolute advantage in making scrambled eggs.
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