Suppose you can type a paper in two hours or mow the lawn in four hours. It takes your friend Ann eight hours to type a paper of the same length and five hours to mow the same size of lawn. Which of the following is true?
A) Ann is the high-opportunity cost producer of both typing and mowing.
B) Since you can type papers and mow lawns faster than Ann, you and Ann cannot benefit from specialization and trade.
C) You and Ann could expand output and gain from trade if she specialized in mowing lawns and you specialized in typing papers.
D) You and Ann could expand output and gain from trade if she specialized in typing papers and you specialized in mowing lawns.

Question

Quizplus · Accepted Answer

You have a comparative advantage in typing papers because you can do it faster than Ann, while Ann has a comparative advantage in mowing lawns because her opportunity cost of mowing is lower than yours. By specializing in their respective areas of comparative advantage, both can benefit from trade.

Suppose You Can Type a Paper in Two Hours or Mow