You and your neighbor both can bake bread and change the oil in your vehicle.You determine that you can change the oil in 10 vehicles or bake 30 loaves of bread in a day.Your neighbor can change the oil in 18 vehicles in a day or bake 25 loaves of bread.Based on this information

Question

Quizplus · Accepted Answer

This is determined by comparing the opportunity costs of each activity for you and your neighbor. You can bake 3 loaves of bread for every vehicle's oil you can change (30 loaves / 10 oil changes), while your neighbor can bake only 1.39 loaves of bread for every vehicle's oil they can change (25 loaves / 18 oil changes). Therefore, you have a comparative advantage in baking bread, and your neighbor has a comparative advantage in changing oil.

You and Your Neighbor Both Can Bake Bread and Change