In one week Alice can produce 5 pairs of shoes or 4 bookshelves while Roger can produce 10 pairs of shoes or 6 bookshelves. Alice has _______ advantage in producing _______.

Question

Quizplus · Accepted Answer

Alice has a comparative advantage in producing bookshelves because she gives up fewer shoes to produce one bookshelf compared to Roger. Alice sacrifices 1.25 pairs of shoes (5/4) for each bookshelf, while Roger sacrifices 1.67 pairs of shoes (10/6) for each bookshelf. Comparative advantage is determined by who has the lower opportunity cost in production.

In One Week Alice Can Produce 5 Pairs of Shoes