Figure 3-4
-Refer to Figure 3-4. Which of the following is correct?
A)Ben has a comparative advantage in beer, and Jerry has a comparative advantage in wine.
B)Ben has a comparative advantage in wine, and Jerry has a comparative advantage in beer.
C)Ben has a comparative advantage in neither good, and Jerry has a comparative advantage in wine.
D)Ben has a comparative advantage in both goods, and Jerry has a comparative advantage in neither.

Question

Figure 3-4  
-Refer to Figure 3-4. Which of the following is correct?
A)Ben has a comparative advantage in beer, and Jerry has a comparative advantage in wine. 
B)Ben has a comparative advantage in wine, and Jerry has a comparative advantage in beer. 
C)Ben has a comparative advantage in neither good, and Jerry has a comparative advantage in wine. 
D)Ben has a comparative advantage in both goods, and Jerry has a comparative advantage in neither.

Quizplus · Accepted Answer

In the figure, we can see that Ben's opportunity cost of producing one bottle of wine is 2 bottles of beer (he gives up producing 2 bottles of beer to produce 1 bottle of wine), whereas Jerry's opportunity cost of producing one bottle of wine is 3 bottles of beer (he gives up producing 3 bottles of beer to produce 1 bottle of wine). This means that Ben can produce wine with a lower opportunity cost than Jerry, and Jerry can produce beer with a lower opportunity cost than Ben. Thus, Ben has a comparative advantage in wine, and Jerry has a comparative advantage in beer.