Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is correct?
A) Homer has a comparative advantage in both catching fish and picking fruit.
B) Teddy has a comparative advantage in both catching fish and picking fruit.
C) Homer has a comparative advantage in picking fruit and Teddy has a comparative advantage in catching fish.
D) Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit.

Question

Quizplus · Accepted Answer

Homer has a lower opportunity cost of catching fish (1 fruit foregone for 1.5 fish caught) compared to Teddy (3 fruits foregone for 1 fish caught), while Teddy has a lower opportunity cost of picking fruit (0.33 fish foregone for 1 fruit picked) compared to Homer (1.5 fish foregone for 1 fruit picked). Therefore, Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit.

Homer and Teddy Are Stranded on a Desert Island