Table 3-2

-According to Table 3-2:
A) Lee has a comparative advantage in rice, and John has an absolute advantage in butter
B) Lee has a comparative advantage in butter, and John has an absolute advantage in rice
C) Lee has a comparative advantage in rice, and John has an absolute advantage in neither good
D) Lee has a comparative advantage in butter, and John has an absolute advantage in neither good

Question

Table 3-2
 
-According to Table 3-2:
A) Lee has a comparative advantage in rice, and John has an absolute advantage in butter 
B) Lee has a comparative advantage in butter, and John has an absolute advantage in rice 
C) Lee has a comparative advantage in rice, and John has an absolute advantage in neither good 
D) Lee has a comparative advantage in butter, and John has an absolute advantage in neither good

Quizplus · Accepted Answer

Comparative advantage is determined by who has the lower opportunity cost for producing a good. Absolute advantage is determined by who can produce more of a good with the same resources. The statement indicates Lee has a comparative advantage in rice, and John does not have an absolute advantage in either good.

Table 3-2 -According to Table 3-2