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Fact 2.4.1
In one hour, Sue can produce 50 caps or 10 jackets, and Tessa can produce 70 caps or 7 jackets.
-Refer to Fact 2.4.1. ________ has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps, ________.
A)Sue; Tessa gains but Sue loses
B)Tessa; Sue loses but Tessa gains
C)Sue; both Sue and Tessa gain
D)Tessa; both Sue and Tessa gain
E)Tessa; Tessa loses but Sue gains

Question

Quizplus · Accepted Answer

Tessa has a comparative advantage in producing caps because she can produce more caps per hour than Sue. If they trade 1 jacket for 7 caps, both benefit because they are trading at a rate that is better than their opportunity cost.

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