Question

A 3-column table has 2 rows. The first column has entries Sam, K C. The second column is labeled Opportunity Cost per tax return with entries 10 sales calls, 4 sales calls. The third column is labeled Opportunity Cost per Sales Call with entries 0.1 tax returns, 0.25 tax returns.
Use the production possibility schedule to complete each sentence.

Producers have a comparative advantage when they have a
opportunity cost.


has a comparative advantage in processing tax returns.


has a comparative advantage in making sales calls.

Answer 1

Producers have a comparative advantage when they have a lower opportunity cost.

K C has a comparative advantage in processing tax returns (4 sales calls foregone < 10).

Sam has a comparative advantage in making sales calls (0.1 tax returns foregone < 0.25).