Use the following scenario to answer the questions that follow.
Amy can produce either 5,000 pounds of cheese or 20 houses per year. Jim can produce either 5,000 pounds of cheese or 10 houses per year.
-Amy has a comparative advantage in the production of ________,and Jim has a comparative advantage in the production of ________.

Question

Quizplus · Accepted Answer

Amy has a lower opportunity cost for producing houses (1 house costs her 250 pounds of cheese) compared to Jim (1 house costs him 500 pounds of cheese), so she has a comparative advantage in houses. Jim has a lower opportunity cost for producing cheese (1 pound of cheese costs him 0.002 houses) compared to Amy (1 pound of cheese costs her 0.004 houses), so he has a comparative advantage in cheese.

Use the Following Scenario to Answer the Questions That Follow