Table 9-2

Sarita and Gabriel own S&G Bakery. Table 9-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day.
-Refer to Table 9-2.Select the statement that accurately interprets the data in the table.
A)Sarita has a comparative advantage in baking pies.
B)Gabriel has an absolute advantage in baking cakes.
C)Gabriel has a comparative advantage in baking pies.
D)Gabriel has a comparative advantage in baking pies and baking cakes.

Question

Table 9-2
  
Sarita and Gabriel own S&G Bakery. Table 9-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day.
-Refer to Table 9-2.Select the statement that accurately interprets the data in the table.
A)Sarita has a comparative advantage in baking pies. 
B)Gabriel has an absolute advantage in baking cakes. 
C)Gabriel has a comparative advantage in baking pies. 
D)Gabriel has a comparative advantage in baking pies and baking cakes.

Quizplus · Accepted Answer

Comparative advantage is based on the opportunity cost of producing a certain good. In this case, we can calculate the opportunity cost of pies and cakes for each baker. Sarita's opportunity cost of baking a pie is 2/3 of a cake (since it takes her 2 hours to bake a pie and 3 hours to bake a cake), while Gabriel's opportunity cost of baking a pie is 1 cake (since it takes him 2 hours to bake a pie and 2 hours to bake a cake). Therefore, Gabriel has a lower opportunity cost for pies and a comparative advantage in baking them.

Table 9-2 Sarita and Gabriel Own S&G Bakery. Table 9-2 Lists the Bakery