If Luke can bake bread at a lower opportunity cost than Jason, and Jason can produce paintings at a lower opportunity cost than Luke, it follows that
A)Luke has a comparative advantage in paintings and Jason has a comparative advantage in baking bread.
B)Both Luke and Jason have a comparative advantage in baking bread.
C)Both Luke and Jason have a comparative disadvantage in producing paintings.
D)Luke has a comparative advantage in baking bread and Jason has a comparative advantage in producing paintings.

Question

If Luke can bake bread at a lower opportunity cost than Jason, and Jason can produce paintings at a lower opportunity cost than Luke, it follows that
A)Luke has a comparative advantage in paintings and Jason has a comparative advantage in baking bread.
B)Both Luke and Jason have a comparative advantage in baking bread.
C)Both Luke and Jason have a comparative disadvantage in producing paintings.
D)Luke has a comparative advantage in baking bread and Jason has a comparative advantage in producing paintings.

Quizplus · Accepted Answer

The principle of comparative advantage suggests that each person should specialize in producing the good for which they have the lowest opportunity cost. In this situation, Luke has a lower opportunity cost for baking bread, so he has a comparative advantage in that task. Jason, on the other hand, has a lower opportunity cost for producing paintings, so he has a comparative advantage in that task. Therefore, the best choice is D, which states that Luke has a comparative advantage in baking bread and Jason has a comparative advantage in producing paintings.

If Luke Can Bake Bread at a Lower Opportunity Cost