Which of the following describes comparative advantage?
A) Company A can produce 4 boxes of cereal in a day whereas Company B can produce 5 boxes of cereal in a day.
B) Firm A can produce a good at a cost of $3 and Firm B can produce the good at a cost of $4.
C) Jane can type 50 words per minute and Joe can type 60 words per minute.
D) To produce a bushel of wheat Farmer John must give up 2 bushels of corn whereas Farmer Ben must give up 3 bushels of corn.

Question

Quizplus · Accepted Answer

Comparative advantage is the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than others. In this case, Farmer John has a lower opportunity cost of producing wheat than Farmer Ben (2 bushels of corn compared to 3 bushels of corn), so Farmer John has a comparative advantage in producing wheat.

Which of the Following Describes Comparative Advantage