Given the production possibility tables for First and Second Bakeries shown, we can determine that: $$\begin{array} { c }
{ \text { First Bakery } } \quad\quad { \text { Second Bukery } } \
\begin{array} { | c | c | c | c | }
\hline \text { Conkies } & \text { Pies } & \text { Conkies } & \text { Pies } \
\hline 0 & 18 & 0 & 9 \
\hline 10 & 12 & 30 & 6 \
\hline 20 & 6 & 60 & 3 \
\hline 30 & 0 & 90 & 0 \
\hline
\end{array}\end{array}$$
A)First Bakery has a comparative advantage in the production of both goods.
B)Second Bakery has a comparative advantage in the production of pies.
C)First Bakery has a comparative advantage in the production of pies.
D)neither bakery has a comparative advantage.

Question

Given the production possibility tables for First and Second Bakeries shown, we can determine that: $$\begin{array} { c } 
{ \text { First Bakery } }  \quad\quad  { \text { Second Bukery } } \
\begin{array} { | c | c | c | c | } 
\hline \text { Conkies } & \text { Pies } & \text { Conkies } & \text { Pies } \
\hline 0 & 18 & 0 & 9 \
\hline 10 & 12 & 30 & 6 \
\hline 20 & 6 & 60 & 3 \
\hline 30 & 0 & 90 & 0 \
\hline
\end{array}\end{array}$$
A)First Bakery has a comparative advantage in the production of both goods.
B)Second Bakery has a comparative advantage in the production of pies.
C)First Bakery has a comparative advantage in the production of pies.
D)neither bakery has a comparative advantage.

Quizplus · Accepted Answer

Comparative advantage is determined by who has the lower opportunity cost in producing a good. For pies, the First Bakery goes from 18 to 12 pies (a loss of 6 pies) to produce 10 more conkies, while the Second Bakery goes from 9 to 6 pies (a loss of 3 pies) to produce 30 more conkies. This means the Second Bakery gives up fewer pies to produce more conkies, indicating the First Bakery has a comparative advantage in pies because it has to give up more to produce conkies. Comparative advantage in conkies is not directly asked, but by similar analysis, the Second Bakery would have it in conkies, not mentioned in the options.

Given the Production Possibility Tables for First and Second Bakeries