You have noticed that your next-door neighbor, Mary, always works in the garden and her husband, Joe, always walks the dog. Based on this observation, you conclude that:
A) Mary has an absolute advantage in gardening.
B) Joe has a comparative advantage in walking the dog.
C) Mary does not understand the principle of low-hanging fruit.
D) Joe experiences increasing opportunity costs when he gardens, but not when he walks the dog.

Question

Quizplus · Accepted Answer

Comparative advantage is the ability to produce a good or service at a lower opportunity cost than another producer. In this case, Mary may be better at gardening than Joe, but if Joe has a lower opportunity cost for walking the dog (i.e. he can walk the dog in less time or effort than it would take Mary to do the same), then he has a comparative advantage in that activity.

You Have Noticed That Your Next-Door Neighbor, Mary, Always Works