Sia
Question
Statistics
Posted 10 months ago
Alex and Henry are completing group work for class. The input table belo gives the time that it takes Henry and Alex to complete their homework assignments in hours.
\begin{tabular}{lll}
& Time to complete Worksheets & Time to complete Essays \\
\hline Henry & 1 hour & 2 hours \\
Alex & 1 hour & 3 hours
\end{tabular}
Who has comparative advantage in producing essays?
Choose 1 answer:
(A) Alex
(B) Henry
(C) Neither Henry nor Alex
(D) Both Henry and Alex
() We cannot determine who has comparative advantage
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Answer from Sia
Posted 10 months ago
Solution by Steps
step 1
Identify the opportunity cost for each person to produce essays. The opportunity cost is the amount of other goods that must be given up to produce one unit of a good. In this case, we need to find out how many worksheets each person could complete in the time it takes them to write one essay
step 2
Calculate Henry's opportunity cost of writing essays. Since Henry can complete 1 worksheet in 1 hour and 1 essay in 2 hours, his opportunity cost of writing 1 essay is the 2 worksheets he could have completed in that time
step 3
Calculate Alex's opportunity cost of writing essays. Since Alex can complete 1 worksheet in 1 hour and 1 essay in 3 hours, his opportunity cost of writing 1 essay is the 3 worksheets he could have completed in that time
step 4
Compare the opportunity costs. The person with the lower opportunity cost of producing essays has the comparative advantage
step 5
Determine who has the comparative advantage. Henry's opportunity cost is 2 worksheets per essay, and Alex's opportunity cost is 3 worksheets per essay. Therefore, Henry has the lower opportunity cost and the comparative advantage in producing essays
Answer
B
Key Concept
Comparative Advantage
Explanation
Comparative advantage occurs when an individual or group can produce a good at a lower opportunity cost than others. It is not about who is the absolute best at producing a good, but who sacrifices the least to do so.
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