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

Question

Quizplus · Accepted Answer

Comparative advantage is when an entity can produce a good at a lower opportunity cost than another. In this case, Farmer John gives up less corn to produce wheat compared to Farmer Ben.

Which of the Following Describes Comparative Advantage