Sia
Question
Macroeconomics
Posted 7 months ago
Martha and Dave like to make tacos and cakes. The time it takes for Martha and Dave to make tacos and cakes is given in the table below.
\begin{tabular}{lll}
& Martha & Dave \\
\hline Time to make a taco & 10 minutes & 15 minutes \\
Time to make a cake & 20 minutes & 30 minutes
\end{tabular}
Which person has a comparative advantage in the production of tacos, and which person has a comparative advantage in the production of cakes?
Choose 1 answer:
A They both have a comparative advantage in producing tacos; neither person has a comparative advantage in producing cakes.
(B) Dave has a comparative advantage in producing both goods.
(c) Neither person has comparative advantage in producing either good.
(D) Both have a comparative advantage in producing both goods.
(E) Martha has a comparative advantage in producing both goods.
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Answer from Sia
Posted 7 months ago
E
Key Concept
Comparative Advantage
Explanation
Comparative advantage occurs when an individual or country can produce a good or service at a lower opportunity cost than others. Martha has a comparative advantage in producing both tacos and cakes because she can produce them at a lower opportunity cost than Dave. For tacos, Martha takes 10 minutes compared to Dave's 15 minutes, and for cakes, she takes 20 minutes compared to Dave's 30 minutes. Thus, Martha can produce both goods using less time, which is the resource in question, than Dave.
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