Figure 3-3

-Refer to Figure 3-3.Ginger has an absolute advantage in
A)tap shoes and Fred has a comparative advantage in ballet slippers.
B)both goods and Fred has a comparative advantage in neither good.
C)ballet slippers and Fred has a comparative advantage in tap shoes.
D)neither good and Fred has a comparative advantage in both goods.

Question

Figure 3-3
 
-Refer to Figure 3-3.Ginger has an absolute advantage in
A)tap shoes and Fred has a comparative advantage in ballet slippers. 
B)both goods and Fred has a comparative advantage in neither good. 
C)ballet slippers and Fred has a comparative advantage in tap shoes. 
D)neither good and Fred has a comparative advantage in both goods.

Quizplus · Accepted Answer

Ginger can produce more ballet slippers and tap shoes than Fred, but she has an absolute advantage only in ballet slippers. Fred has a comparative advantage in tap shoes because he can produce them at a lower opportunity cost than Ginger. Therefore, Ginger should specialize in producing ballet slippers, and Fred should specialize in producing tap shoes, resulting in a mutually beneficial trade.

Figure 3-3 -Refer to Figure 3-3.Ginger Has an Absolute Advantage in