Figure 3-5
These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour.
-Refer to Figure 3-5. Who has a comparative or absolute advantage in what product?
A) Ginger has an absolute advantage in tap shoes, and Fred has a comparative advantage in ballet slippers.
B) Ginger has an absolute advantage in both goods, and Fred has a comparative advantage in neither good.
C) Ginger has an absolute advantage in ballet slippers, and Fred has a comparative advantage in tap shoes.
D) Ginger has an absolute advantage in neither good, and Fred has a comparative advantage in both goods.

Question

Figure 3-5
These graphs illustrate the production possibilities available for dancing shoes to Fred and Ginger with 40 hours of labour. 
-Refer to Figure 3-5. Who has a comparative or absolute advantage in what product?
A) Ginger has an absolute advantage in tap shoes, and Fred has a comparative advantage in ballet slippers. 
B) Ginger has an absolute advantage in both goods, and Fred has a comparative advantage in neither good. 
C) Ginger has an absolute advantage in ballet slippers, and Fred has a comparative advantage in tap shoes. 
D) Ginger has an absolute advantage in neither good, and Fred has a comparative advantage in both goods.

Quizplus · Accepted Answer

Ginger has an absolute advantage in ballet slippers because she can produce more ballet slippers than Fred in the same amount of time (40 hours of labor). On the other hand, Fred has a comparative advantage in tap shoes because even though he can produce fewer tap shoes than Ginger, his opportunity cost of producing tap shoes is lower than Ginger's (meaning he gives up fewer ballet slippers to produce tap shoes). Therefore, it is most efficient for Ginger to specialize in producing ballet slippers and for Fred to specialize in producing tap shoes. This way, they can trade with each other and both end up with a combination of both goods that is above their individual production possibilities curves.

Figure 3-5 These Graphs Illustrate the Production Possibilities Available for Dancing Shoes