If Shawn can produce donuts at a lower opportunity cost than Sue, which of the following is correct?
A)Shawn has a comparative advantage in the production of donuts.
B)Sue has a comparative advantage in the production of donuts.
C)Shawn should be retrained and produce a different product.
D)It is obvious that Shawn is capable of producing more donuts than Sue.

Question

Quizplus · Accepted Answer

If Shawn can produce donuts at a lower opportunity cost than Sue, it means that for every unit of donut that Shawn produces, he is giving up fewer units of other goods or services compared to Sue. This means Shawn has a comparative advantage in the production of donuts, and should focus on producing more donuts while Sue should focus more on producing goods or services in which she has a lower opportunity cost.

If Shawn Can Produce Donuts at a Lower Opportunity Cost