9) Suppose Joe can prepare 10 sandwiches or 5 pizzas in an hour and Beth can pro

Question

9) Suppose Joe can prepare 10 sandwiches or 5 pizzas in an hour and Beth can produce 12. sandwiches or 9 pizzas. Which of the following is true? A) Joe should produce pizza because he has a lower opportunity cost of producing pizza than does Beth. B) Beth should produce pizza because she has a higher opportunity cost of producing pi because she has a lower opportunity cost of producing p ty cost of producing than does Joe. than does Joe. than does Beth. C) Beth should produce pizza D) Joe should produce pizza because he has a higher opportuni

Explanation / Answer

Currect option is C-Beth should produce pizza because she has a lower opportunity cost of producing pizza than does Joe,

In this way we say that,the producer that requires a lower quantity inputs to produce a good is said to have an absolute advantage in producing that good. Comparative advantage refers to the ability of a party to produce a particular good or service at a lower opportunity cost than another.

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