Figure 3-5
These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour.
-Refer to Figure 3-5. Who has a comparative advantage in each good?

Question

Figure 3-5
These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. 
-Refer to Figure 3-5. Who has a comparative advantage in each good?

Quizplus · Accepted Answer

Comparative advantage is determined by the opportunity cost of producing a good. In this case, we can see that Ginger can produce 10 tap shoes or 5 ballet slippers with her 40 hours of labor, while Fred can only produce 5 tap shoes or 10 ballet slippers with his 40 hours of labor. Therefore, Ginger has a lower opportunity cost for producing ballet slippers (2 tap shoes per 1 ballet slipper) while Fred has a lower opportunity cost for producing tap shoes (2 ballet slippers per 1 tap shoe). Thus, Ginger has a comparative advantage in ballet slippers, and Fred has a comparative advantage in tap shoes. Therefore, the best choice is option C.

Figure 3-5 These Graphs Illustrate the Production Possibilities Available for Dancing Shoes