Refer to the table above. Based on their comparative advantage, Martha should specialize in _______ while Julia should specialize in _______.

Question

Quizplus · Accepted Answer

Martha has the comparative advantage in pies, and Julia has the comparative advantage in cakes. To see this note that Martha's opportunity cost of making a pie (3/4 of a cake) is less than Julia's (5/6 of a cake), and Julia's opportunity cost of making a cake (6/5 of a pie) is less than Martha's (4/3 of a pie).

Refer to the Table Above