Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity?
A) One individual's production possibilities frontier is steeper than the other individual's production possibilities frontier.
B) One individual is faster at both activities than the other individual.
C) One individual's opportunity costs are the same as the other individual's opportunity costs.
D) None of the above is correct; one of the two individuals always will have a comparative advantage in at least one of the two activities.

Question

Quizplus · Accepted Answer

Comparative advantage arises when one individual has a lower opportunity cost of producing a good or service than the other individual. If both individuals have the same opportunity costs for producing both goods or services, then neither individual would have a comparative advantage in either activity.

Two Individuals Engage in the Same Two Productive Activities