Mike and Sandy are two woodworkers who both make tables and chairs. In 1 month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. What do we know?
A)Mike has a comparative advantage in tables.
B)Sandy has an absolute advantage in chairs.
C)Mike has an absolute advantage in tables.
D)Sandy has a comparative advantage in tables.

Question

Quizplus · Accepted Answer

To determine comparative advantage, we need to look at the opportunity cost of producing each good. For Mike, the opportunity cost of producing one table is giving up the production of 5 chairs (20 chairs / 4 tables). For Sandy, the opportunity cost of producing one table is giving up the production of 3 chairs (18 chairs / 6 tables). Therefore, Sandy has a lower opportunity cost of producing tables and has a comparative advantage in table production.

Mike and Sandy Are Two Woodworkers Who Both Make Tables