Larry has a comparative advantage in writing a term paper if he:
A) can write a paper faster than the other students in class.
B) has an absolute advantage in writing a term paper.
C) always earns an A on his papers.
D) has the lowest opportunity cost for writing a term paper.

Question

Quizplus · Accepted Answer

Comparative advantage is based on opportunity cost, meaning the cost of producing one good in terms of the forgone production of another good. Larry has a comparative advantage if his opportunity cost of writing a term paper is lower than that of the other students, meaning he gives up less to produce it. This has nothing to do with his absolute advantage (choice B) or his speed (choice A), but rather with his efficiency in terms of what he gives up. Getting an A on his papers (choice C) may reflect his ability, but it does not necessarily indicate his opportunity cost.

Larry Has a Comparative Advantage in Writing a Term Paper