Table 3-1

-Refer to Table 3-1.The rancher has a comparative advantage in
A)neither good, and the farmer has a comparative advantage in both goods.
B)both goods, and the farmer has a comparative advantage in neither good.
C)potatoes, and the farmer has a comparative advantage in meat.
D)meat, and the farmer has a comparative advantage in potatoes.

Question

Table 3-1
 
-Refer to Table 3-1.The rancher has a comparative advantage in
A)neither good, and the farmer has a comparative advantage in both goods. 
B)both goods, and the farmer has a comparative advantage in neither good. 
C)potatoes, and the farmer has a comparative advantage in meat. 
D)meat, and the farmer has a comparative advantage in potatoes.

Quizplus · Accepted Answer

The rancher can produce 1 pound of meat with only giving up 1/2 pound of potatoes. On the other hand, the farmer can only produce 1 pound of meat by giving up 2 pounds of potatoes. Therefore, the rancher has a lower opportunity cost of producing meat and thus has a comparative advantage in producing meat. Conversely, the farmer has a lower opportunity cost of producing potatoes and thus has a comparative advantage in producing potatoes.

Table 3-1 -Refer to Table 3-1.The Rancher Has a Comparative Advantage in a Comparative