Hank requires 1 hour to cut the grass and 3 hours to clean the house. His sister

Question

Hank requires 1 hour to cut the grass and 3 hours to clean the house. His sister Holly requires 1 hour to cut the grass and 4 hours to clean the house. Which of the following statements is true? Hank has a comparative advantage in both cutting the grass and cleaning the house. Hank and Holly both have a comparative advantage in cutting the grass. Hank has a lower opportunity cost of cutting the grass. Hank has an absolute advantage in both cutting the grass and cleaning the house. Holly has a comparative advantage in cutting the grass. Which of the following is correct about comparative advantage? Some countries will have a comparative advantage in everything. Having a comparative advantage without an absolute advantage is impossible. A comparative advantage in a good means that the country can produce more of the good than any other country. A country has a comparative advantage in the production of a good if it can produce the good at lower opportunity cost than any

Explanation / Answer

14.

Table of production

Persons

Productions (in hours)

Cutting

Cleaning

Ha

1

3

Ho

1

4

Absolute advantage: This is the comparison between two persons, of which one is doing thing more efficiently than other (suppose in less hours).

Here Ha is doing both the things (cutting and cleaning) in less number of hours than Ho. Therefore, Ha has absolute advantage.

Answer: The forth option is true.

Persons

Productions (in hours)

Cutting

Cleaning

Ha

1

3

Ho

1

4

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