Multiple Choice
Who has the comparative 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 comparative advantage in making scrambled eggs?
A
Joe
B
Carla
C
No one
Verified step by step guidance1
Identify the opportunity cost for each individual by analyzing their production possibility frontiers (PPFs). The PPFs show the trade-off between producing scrambled eggs and fresh squeezed orange juice.
For Joe, observe the PPF graph. Determine the maximum number of scrambled eggs and fresh squeezed orange juice he can produce. Calculate the opportunity cost of producing one scrambled egg in terms of fresh squeezed orange juice.
For Carla, observe her PPF graph. Determine the maximum number of scrambled eggs and fresh squeezed orange juice she can produce. Calculate the opportunity cost of producing one scrambled egg in terms of fresh squeezed orange juice.
Compare the opportunity costs calculated for Joe and Carla. The individual with the lower opportunity cost for producing scrambled eggs has the comparative advantage.
Conclude who has the comparative advantage in making scrambled eggs based on the lower opportunity cost identified in the previous step.
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