If they spend all night writing computer programs,Laurence can write 10 programs,and Carrie Anne can write 5.If they spend all night making sunglasses,Laurence can make 6 pairs,and Carrie Anne can make 4.We know that _____ has a comparative advantage in _____.
A)Laurence;programs
B)Laurence;both programs and sunglasses
C)Carrie Anne;programs
D)Carrie Anne;both programs and sunglasses

Question

Quizplus · Accepted Answer

Comparative advantage is determined by who has the lower opportunity cost in producing a good. Laurence can produce 10 programs or 6 sunglasses, meaning for each program Laurence forgoes 0.6 sunglasses (6 sunglasses / 10 programs). Carrie Anne can produce 5 programs or 4 sunglasses, meaning for each program Carrie Anne forgoes 0.8 sunglasses (4 sunglasses / 5 programs). Since Laurence's opportunity cost of producing programs is lower, Laurence has a comparative advantage in programs. For sunglasses, Laurence forgoes 1.67 programs per pair of sunglasses (10 programs / 6 sunglasses), and Carrie Anne forgoes 1.25 programs per pair of sunglasses (5 programs / 4 sunglasses), making Carrie Anne more efficient in producing sunglasses due to a lower opportunity cost. Thus, Laurence has a comparative advantage in programs.

If They Spend All Night Writing Computer Programs,Laurence Can Write