Figure 3-3
Bob's Production Possibilities Frontier Enid's Production Possibilities Frontier
-Refer to Figure 3-3.Bob has an absolute advantage in the production of
A) burritos and a comparative advantage in the production of tacos.
B) burritos and a comparative advantage in the production of burritos.
C) neither good and a comparative advantage in the production of tacos.
D) neither good and a comparative advantage in the production of burritos.

Question

Figure 3-3
Bob's Production Possibilities Frontier Enid's Production Possibilities Frontier  
-Refer to Figure 3-3.Bob has an absolute advantage in the production of
A) burritos and a comparative advantage in the production of tacos. 
B) burritos and a comparative advantage in the production of burritos. 
C) neither good and a comparative advantage in the production of tacos. 
D) neither good and a comparative advantage in the production of burritos.

Quizplus · Accepted Answer

Bob has an absolute advantage in the production of both burritos and tacos (shown by his higher production capabilities on both of his axes), but he has a comparative advantage in the production of burritos because his opportunity cost of producing burritos (in terms of foregone taco production) is lower than Enid's opportunity cost of producing burritos. Therefore, Bob should focus on producing burritos and trade with Enid for tacos, as it would benefit both parties.

Figure 3-3 Bob's Production Possibilities Frontier Enid's Production Possibilities Frontier