In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, Bob can produce either 8 loaves of bread or 8 pounds of butter. Andy has a comparative advantage in the production of
A) bread, while Bob has a comparative advantage in the production of butter.
B) butter, while Bob has a comparative advantage in the production of bread.
C) bread and neither has a comparative advantage in the production of butter.
D) both bread and butter.

Question

Quizplus · Accepted Answer

Andy has a lower opportunity cost for producing bread (1/3 pound of butter per loaf) compared to Bob (1 pound of butter per loaf), giving Andy a comparative advantage in bread. Bob has a lower opportunity cost for producing butter (1 loaf of bread per pound) compared to Andy (3 loaves of bread per pound), giving Bob a comparative advantage in butter.

In an Eight-Hour Day, Andy Can Produce Either 24 Loaves