An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. ________ has the comparative advantage in TVs and ________ has the comparative advantage in radios.
A)Jen; Jen
B)Rich; Rich
C)Jen; Rich
D)Rich; Jen

Question

Quizplus · Accepted Answer

Since Rich's opportunity cost of producing a TV is less than Jen's (3 radios < 5 radios), Rich has the comparative advantage in producing TVs. Similarly, since Jen's opportunity cost of producing radios is less Rich's (1/5 of a TV < 1/3 of a TV), Jen has the comparative advantage in producing radios.

An Economy Has Two Workers, Jen and Rich