If Kami can produce 40 tablets or 30 cellphones during a month's time, while Sally can produce 10 tablets or 20 cellphones, then it is correct to state that
A)Kami has a comparative advantage in producing tablets.
B)Kami has a comparative advantage in producing both tablets and cellphones.
C)Sally has a comparative advantage in producing both tablets and cellphones.
D)Sally has an absolute advantage in tablets.

Question

Quizplus · Accepted Answer

To determine comparative advantage, we look at the opportunity cost of producing one good over the other. Kami's opportunity cost of producing one tablet is 30/40 or 0.75 cellphones, while Sally's opportunity cost of producing one tablet is 20/10 or 2 cellphones. Therefore, Kami has a lower opportunity cost of producing tablets compared to Sally, indicating that Kami has a comparative advantage in producing tablets.

If Kami Can Produce 40 Tablets or 30 Cellphones During