Exhibit 2-9 Refer to Exhibit 2-9. Who has the comparative advantage in the production of good A?
A)Alex
B)Adam
C)Both Alex and Adam
D)Neither Alex nor Adam

Question

Exhibit 2-9  Refer to Exhibit 2-9. Who has the comparative advantage in the production of good A?
A)Alex 
B)Adam 
C)Both Alex and Adam 
D)Neither Alex nor Adam

Quizplus · Accepted Answer

Adam has the comparative advantage in the production of good A because his opportunity cost of producing one unit of good A is lower than Alex's. Adam can produce 1 unit of A by giving up only 0.5 units of B whereas Alex has to give up 2 units of B for producing 1 unit of A. Therefore, Adam can produce good A more efficiently with fewer resources and has a lower opportunity cost of producing it.