Suppose you can type a paper in two hours or mow the lawn in four hours, while it takes your friend Ann eight hours to type a paper or two hours to mow the lawn. Which of the following is true?
A) You have a comparative advantage in typing.
B) You have a comparative advantage in mowing the lawn.
C) You and Ann could save time if you mowed her lawn while she typed your paper.
D) You and Ann cannot gain from specialization and trade.

Question

Quizplus · Accepted Answer

Comparative advantage refers to the ability to produce a good or service at a lower opportunity cost than another producer. In this scenario, your opportunity cost of typing a paper is four hours of lawn mowing (the time it would take you to mow the lawn), while Ann's opportunity cost of typing a paper is eight hours of lawn mowing (the time it would take her to mow the lawn). Therefore, you have a comparative advantage in typing, as your opportunity cost of typing is lower than Ann's.

Suppose You Can Type a Paper in Two Hours or Mow