In an eight- hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight- hour day, Bob can produce either 8 loaves of bread or 8 pounds of butter. Andy has a comparative advantage in the production of

Question

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To determine comparative advantage, we need to look at the opportunity cost of each person's production. In other words, we need to see what is given up in order to produce one unit of bread or butter.

For Andy: 
- To produce 1 loaf of bread, Andy gives up 1/3 pound of butter (24 loaves of bread divided by 8 pounds of butter). 
- To produce 1 pound of butter, Andy gives up 3 loaves of bread (8 pounds of butter divided by 24 loaves of bread).

For Bob: 
- To produce 1 loaf of bread, Bob gives up 1 pound of butter (8 loaves of bread divided by 8 pounds of butter). 
- To produce 1 pound of butter, Bob gives up 1 loaf of bread (8 pounds of butter divided by 8 loaves of bread).

From this analysis, we can see that Andy has a lower opportunity cost for producing bread, since he only gives up 1/3 pound of butter for each loaf of bread, compared to Bob who gives up 1 pound of butter for each loaf of bread. Therefore, Andy has a comparative advantage in producing bread. On the other hand, Bob has a lower opportunity cost for producing butter, since he only gives up 1 loaf of bread for each pound of butter, compared to Andy who gives up 3 loaves of bread for each pound of butter. Therefore, Bob has a comparative advantage in producing butter.

In an Eight- Hour Day, Andy Can Produce Either 24