Question

Linda Sandy Bathing 60 50 Grooming 20 25 Linda and Sandy own The Preppy Puppy, a dog grooming business. The table above lists the number of dogs Linda and Sandy can each bathe and groom in one week. Select the statement that accurately interprets the data in the table. O A. Sandy has a comparative advantage in dog grooming. O B. Linda has a comparative advantage in dog grooming and dog bathing. O C. Linda has a comparative advantage in dog grooming. OD. Sandy has a comparative advantage in dog bathing.

Answer 1

Linda's opportunity cost of grooming a dog = 60/20= 3
Sandy's opportunity cost of grooming a dog = 50/25= 2
1) Answer - A. Sandy has a comparative advantage in dog grooming.

2) B. The producer bears a greater shareof the tax burden if supply curve is S2

Flatter the supply higher is the inelasticity and higher is the burden of tax on sellers.