If Abigail can produce 4 tablets or 3 cellphones in a day, while Jacob can produce 1 tablet or 2 cellphones, then it is correct to state that
A)Abigail has a comparative advantage in producing cellphones.
B)Abigail has an absolute advantage in producing tablets but not cellphones.
C)Jacob has a comparative advantage in cellphones.
D)Jacob has an absolute advantage in cellphones.

Question

Quizplus · Accepted Answer

To determine who has a comparative advantage, we look at the opportunity cost of producing one unit of a good. Abigail has an opportunity cost of 4/3 tablets for each cellphone and Jacob has an opportunity cost of 1/2 tablet for each cellphone. Therefore, Jacob has a lower opportunity cost of producing cellphones and a comparative advantage in cellphone production.

If Abigail Can Produce 4 Tablets or 3 Cellphones in a Day