Michael can produce the following combinations of X and Y: 10X and 10Y,5X and 15Y,and 0X and 20Y.Vernon can produce the following combinations of X and Y: 100X and 20Y,50X and 30Y,or 0X and 40Y.It follows that
A) Michael has the comparative advantage in producing X and Vernon has the comparative advantage in producing Y.
B) Michael has the comparative advantage in producing Y and Vernon has the comparative advantage in producing X.
C) Neither Michael nor Vernon has a comparative advantage in producing X.
D) Neither Michael nor Vernon has a comparative advantage in producing Y.
E) There is not enough information to answer the question.

Question

Quizplus · Accepted Answer

Comparative advantage is determined by who has the lower opportunity cost in producing a good. For X, Vernon can produce more X for any given amount of Y forgone, indicating Vernon has the comparative advantage in X. For Y, Michael can produce more Y for any given amount of X forgone, indicating Michael has the comparative advantage in Y.

Michael Can Produce the Following Combinations of X and Y