Suppose a producer requires a smaller quantity of inputs to produce carrots than to produce onions. Is this information sufficient to determine in which good the producer has a comparative advantage?
A) Yes, the producer has a comparative advantage in carrots.
B) Yes, the producer has a comparative advantage in onions.
C) No, because information about the costs of inputs is missing.
D) No, because information about other producers is missing.

Question

Quizplus · Accepted Answer

Comparative advantage cannot be determined solely by the quantity of inputs required for one producer; it requires comparing the opportunity costs of producing goods between different producers. Information about how other producers use their resources is necessary to establish comparative advantage.

Suppose a Producer Requires a Smaller Quantity of Inputs to Produce