There are two goods,X and Y.If the opportunity cost of producing good X is lower for Pam than for Gino,then
A)Pam has an absolute advantage in the production of X.
B)Gino has an absolute advantage in the production of Y.
C)Pam has a comparative advantage in the production of X.
D)Gino has a comparative advantage in the production of Y.
E)Both C and D are correct.

Question

Quizplus · Accepted Answer

Having a lower opportunity cost in producing good X means Pam has a comparative advantage in producing X. By definition, if Pam has a comparative advantage in X, Gino must have a comparative advantage in producing the other good, Y, assuming only two goods are involved.

There Are Two Goods,X and Y