Question

Carmen wants to open her own coffee shop. She has narrowed down a list of wholesale retailers and their cost per pound of coffee beans.

Whole Sale Company

Cost per lb.

Café con Leche

$8.50

Beans Brothers

$7.50

Colombian Co.

$11.25

Turkish Coffee Company

$6.25

Which company has the comparative advantage in cost per pound of coffee?

Café con Leche
Beans Brothers
Colombian Co.
Turkish Coffee Company

Answer 1

Turkish Coffee Company — it has the lowest cost per pound ($6.25), so it has the comparative (and absolute) advantage in coffee.