Fact Pattern 18-B
Refer to the following data:
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples.
-Refer to Fact Pattern 18-B.Which of the following is true?

Question

Quizplus · Accepted Answer

Karl can produce more oranges (10 tons) than Adam (5 tons), indicating that Karl has an absolute advantage in producing oranges. However, Adam can produce more apples (10 tons) than Karl (5 tons), indicating that Adam has an absolute advantage in producing apples. When we compare the opportunity costs of producing oranges versus apples, we see that Karl's opportunity cost of producing one ton of apples is giving up the production of two tons of oranges, while Adam's opportunity cost of producing one ton of apples is giving up production of only half a ton of oranges. Therefore, Karl has a comparative advantage in producing oranges, while Adam has a comparative advantage in producing apples.

Fact Pattern 18-B Refer to the Following Data