Table 3-2

-Refer to Table 3-2. Which of the following is correct?
A)The Rancher has a comparative advantage in neither good, and the Farmer has a comparative advantage in both goods.
B)The Rancher has a comparative advantage in both goods, and the Farmer has a comparative advantage in neither good.
C)The Rancher has a comparative advantage in meat, and the Farmer has a comparative advantage in potatoes.
D)The Rancher has a comparative advantage in potatoes, and the Farmer has a comparative advantage in meat.

Question

Table 3-2
 
-Refer to Table 3-2. Which of the following is correct?
A)The Rancher has a comparative advantage in neither good, and the Farmer has a comparative advantage in both goods. 
B)The Rancher has a comparative advantage in both goods, and the Farmer has a comparative advantage in neither good. 
C)The Rancher has a comparative advantage in meat, and the Farmer has a comparative advantage in potatoes. 
D)The Rancher has a comparative advantage in potatoes, and the Farmer has a comparative advantage in meat.

Quizplus · Accepted Answer

To determine comparative advantage, we look at the opportunity cost of producing each good. In this table, we can see that the Rancher can produce 1 pound of meat by giving up only 1/2 pound of potatoes, while the Farmer can produce 1 pound of potatoes by giving up only 1/4 pound of meat. Therefore, the Rancher has a lower opportunity cost of producing meat and a comparative advantage in producing meat, while the Farmer has a lower opportunity cost of producing potatoes and a comparative advantage in producing potatoes.

Table 3-2 -Refer to Table 3-2. Which of the Following Is Correct