Sia
Question
Macroeconomics
Posted 10 months ago
Using the same amount of time and resources, Tomer can either write 100 lines of code or process 20 reports, and Charlotte can either write 120 lines of code or process 20 reports.
Who has a comparative advantage in each thing?
Choose 1 answer:
(A) Tomer has a comparative advantage in both goods.
(B) Charlotte has a comparative advantage in writing code; neither person has a comparative advantage in processing reports.
(c) Charlotte has a comparative advantage in writing lines of code; Tomer has a comparative advantage in processing reports.
(D) Neither person has a comparative advantage in either good.
(E) Charlotte has a comparative advantage in both goods.
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Answer from Sia
Posted 10 months ago
C
Key Concept
Comparative Advantage
Explanation
Comparative advantage occurs when an individual can produce a good at a lower opportunity cost than another. Tomer's opportunity cost of writing 100 lines of code is processing 20 reports, and Charlotte's opportunity cost of writing 120 lines of code is also processing 20 reports. Charlotte can produce more code than Tomer in the same amount of time, giving her a comparative advantage in coding. However, since they both can process the same amount of reports in the time it takes to write their respective lines of code, neither has a comparative advantage in processing reports. Therefore, Charlotte has the comparative advantage in writing code, and Tomer has a comparative advantage in processing reports because he gives up fewer lines of code to process those reports.
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