Table 3-20 Assume that Brad and Theresa can switch between producing wheat and producing beef at...

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Table 3-20 Assume that Brad and Theresa can switch between producing wheat and producing beef at...

Table 3-20

Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate.

	Minutes Needed to Make 1
	Bushel of Wheat	Pound of Beef
Brad	10	12
Theresa	6	10

Refer to Table 3-20. Brad has a comparative advantage in the production of

wheat and Theresa has a comparative advantage in the production of beef.

beef and Theresa has a comparative advantage in the production of wheat.

both goods and Theresa has a comparative advantage in the production of neither good.

neither good and Theresa has a comparative advantage in the production of both goods.

business economics

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Answer 1

Answer #1

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The correct answer is "option 2"
beef and Theresa has a comparative advantage in the production of wheat.

Comparative advantage depends on the lower opportunity cost of the cost.
The opportunity cost of production of a good= Time needed to produce the good/time needed to produce other good

The opportunity cost of production of wheat for Brad=10/12=0.83 beef

The opportunity cost of production of wheat for Theresa=6/10=0.60 beef

The opportunity cost of wheat is lower for Theresa, So Theresa has a comparative advantage in wheat and Brad has a comparative advantage in beef.

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Answer 2

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