Comparative and Absolute Advantage

Question 1

Look at the examples, and then determine which type of advantage each one describes. A producer can provide cable service more cheaply than another producer. A producer can produce salads while giving up fewer opportunities to make sandwiches than another producer. A producer can create more car parts than another producer, while using the same number of resources.

Revolt · Accepted Answer

absolute; Selection 1: absolute; Selection 2: comparative; Selection 3: absolute

Question 2

absolute✔ comparative

Revolt · Accepted Answer

✔ comparative

Question 3

✔ absolute comparative

Revolt · Accepted Answer

✔ absolute

Question 4

Sam and KC both work in a tax office. Both workers use the same number of resources to do their jobs. Use the production possibility schedule to complete each sentence. In this example, has an absolute advantage in processing tax returns. has an absolute advantage in completing sales calls.

Revolt · Accepted Answer

KC; Selection 1: KC; Selection 2: Sam

Question 5

Use the production possibility schedule to complete each sentence. Producers have a comparative advantage when they have a opportunity cost. has a comparative advantage in processing tax returns. has a comparative advantage in making sales calls.

Revolt · Accepted Answer

lower; Selection 1: lower; Selection 2: KC; Selection 3: Sam

Question 6

Which of the following statements is a valid economic conclusion based on this information?

Revolt · Accepted Answer

It would be best for Sam to work only on making sales calls.

Question 7

Based on the information in the scenario, describe the absolute and comparative advantage held by each worker in Hector’s office.Give your answer in the form of at least three sentences.

Revolt · Accepted Answer

Sasha has an absolute advantage in producing computer-generated graphics because she is very good at that work and Maurice is not efficient on the computer. Maurice has an absolute advantage in designing logos because he is skilled at creating them by hand, while Sasha is less talented at logo design. Based on their relative strengths, Sasha has a comparative advantage in computer-generated graphics, and Maurice has a comparative advantage in logo design.

Question 8

How should Hector use specialization to solve his problem?Based on the scenario, recommend which employee should work on which task.

Revolt · Accepted Answer

Hector should have Sasha focus on producing computer-generated graphics and Maurice focus on designing logos with pen and paper, so each specializes in the task they do best.

Question 9

✔ Sam KC

Revolt · Accepted Answer

✔ Sam

Question 10

Sam✔ KC

Revolt · Accepted Answer

✔ KC

Comparative and Absolute Advantage Answers

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