-Refer to Table 3-1. What does each producer have a comparative advantage in?
A) The rancher has a comparative advantage in neither good, and the farmer has a comparative advantage in both goods.
B) The rancher has a comparative advantage in both goods, and the farmer has a comparative advantage in neither good.
C) The rancher has a comparative advantage in meat, and the farmer has a comparative advantage in potatoes.
D) The rancher has a comparative advantage in potatoes, and the farmer has a comparative advantage in meat.

Question

-Refer to Table 3-1. What does each producer have a comparative advantage in?
A) The rancher has a comparative advantage in neither good, and the farmer has a comparative advantage in both goods. 
B) The rancher has a comparative advantage in both goods, and the farmer has a comparative advantage in neither good. 
C) The rancher has a comparative advantage in meat, and the farmer has a comparative advantage in potatoes. 
D) The rancher has a comparative advantage in potatoes, and the farmer has a comparative advantage in meat.

Quizplus · Accepted Answer

Comparative advantage is determined by who has the lower opportunity cost in producing a good. Without seeing Table 3-1, the correct answer cannot be directly identified from the question. However, the principle of comparative advantage suggests that each producer specializes in the production of the good for which they have a lower opportunity cost, implying that typically one producer will have a comparative advantage in one good, and the other producer will have a comparative advantage in the other good.