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
A) bread, while Bob has a comparative advantage in the production of butter.
B) bread and neither has a comparative advantage in the production of butter.
C) butter, while Bob has a comparative advantage in the production of bread.
D) both bread and butter.

Question

Quizplus · Accepted Answer

Comparative advantage refers to the ability of a producer to produce a good or service at a lower opportunity cost than another producer. In this case, Andy can produce 3 loaves of bread in the time it would take him to produce 1 pound of butter (24 loaves/8 pounds). On the other hand, Bob can produce only 1 loaf of bread in the time it would take him to produce 1 pound of butter (8 loaves/8 pounds). Therefore, Andy has a comparative advantage in the production of bread, while Bob has a comparative advantage in the production of butter.

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