Asked by
MANISH CHOUHAN
on Dec 11, 2024
Verified
Jayden can produce 10 pens or 20 pencils in one hour while Alexander can produce 15 pens or 5 pencils in one hour. Which of the following statements is correct?
A) Alexander has a comparative advantage over Jayden in the production of pencils
B) Alexander has a comparative advantage over Jayden in the production of pens
C) Jayden has a comparative advantage over Alexander in the production of pens
D) Alexander and Jayden cannot gain from specialization and exchange.
Comparative Advantage
The ability of an entity to produce a good or service at a lower opportunity cost than its competitors.
Specialization
The process of focusing on and becoming expert in a particular subject or skill, often resulting in increased efficiency and productivity in economic contexts.
Exchange
The act of giving one thing and receiving another (especially of the same type or value) in return.
- Differentiate between comparative and absolute advantage.
Verified Answer
NB
Learning Objectives
- Differentiate between comparative and absolute advantage.