Table 3-8
Assume that Kito and Penda can switch between producing baskets and producing birdhouses at a constant rate.

-Refer to Table 3-8.Penda has an absolute advantage in the production of
A) baskets and a comparative advantage in the production of baskets.
B) baskets and a comparative advantage in the production of birdhouses.
C) neither good and a comparative advantage in the production of baskets.
D) neither good and a comparative advantage in the production of birdhouses.

Question

Table 3-8
Assume that Kito and Penda can switch between producing baskets and producing birdhouses at a constant rate.
 
-Refer to Table 3-8.Penda has an absolute advantage in the production of
A) baskets and a comparative advantage in the production of baskets. 
B) baskets and a comparative advantage in the production of birdhouses. 
C) neither good and a comparative advantage in the production of baskets. 
D) neither good and a comparative advantage in the production of birdhouses.

Quizplus · Accepted Answer

Penda has an absolute advantage in the production of baskets because she can produce more baskets per hour than her friend. She also has a comparative advantage in the production of baskets because she can produce them at a lower opportunity cost than her friend.

Table 3-8 Assume That Kito and Penda Can Switch Between Producing Baskets