Homework Answers
Nancy takes 4 hours to replace a clutch and 2 hours to replace a
set of brakes.
So,
The opportunity cost of replacing a set of brakes for Nancy is (2/4) replacing 1/2 clutches.
Bill takes 6 hours to replace a clutch and 2 hours to replace a set of brakes.
So,
The opportunity cost of replacing a set of brakes for Bill is (2/6) replacing 1/3 clutches.
Nancy can replace brake at lower opportunity cost relative to Bill while Bill can replace clutch at lower opportunity cost relative to Nancy.
So,
Nancy has a comparative advantage in brake replacement.
Bill has a comparative advantage in clutch replacement.
No one has an absolute advantage in brake replacement.
Nancy has an absolute advantage in clutch replacement.
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Nancy and Bill are auto mechanics. Nancy takes 4 hours to replace a clutch and 2...
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