Table 2.5

Table 2.5 shows the output per week of two jewelers, Serena and Haley.They can either devote their time to making bracelets or making necklaces.
-Refer to Table 2.5.Which of the following statements is true?
A)Haley has a comparative advantage in making both products.
B)Serena has a comparative advantage in making both products.
C)Haley has a comparative advantage in making bracelets and Serena in making necklaces.
D)Haley has a comparative advantage in making necklaces and Serena in making bracelets.

Question

Table 2.5

Table 2.5 shows the output per week of two jewelers, Serena and Haley.They can either devote their time to making bracelets or making necklaces.
-Refer to Table 2.5.Which of the following statements is true?
A)Haley has a comparative advantage in making both products. 
B)Serena has a comparative advantage in making both products. 
C)Haley has a comparative advantage in making bracelets and Serena in making necklaces. 
D)Haley has a comparative advantage in making necklaces and Serena in making bracelets.

Quizplus · Accepted Answer

To determine comparative advantage, we need to compare the opportunity cost of producing one good with that of the other. Haley has a lower opportunity cost of producing bracelets (2 necklaces forgone) compared to Serena (3 necklaces forgone) and thus has a comparative advantage in making bracelets. Serena has a lower opportunity cost of making necklaces (2 bracelets forgone) compared to Haley (3 bracelets forgone) and thus has a comparative advantage in making necklaces. Therefore, Haley has a comparative advantage in making bracelets and Serena in making necklaces.

Table 2.5 Table 2.5 Shows the Output Per Week of Two