Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. Amy has a comparative advantage in producing ________, and Mike has a comparative advantage in producing ________.

Question

Quizplus · Accepted Answer

Amy's opportunity cost of producing cars is lower than is Mike's (250 < 500), while Mike's opportunity cost of produce cheese is lower than is Amy's (1/500 < 1/250). So Amy has a comparative advantage in cars, and Mike has a comparative advantage in cheese.

Amy Can Produce Either 5,000 Pounds of Cheese or 20