Wheat8Paul10CornWheat64CliffRefer to Figure 3-1. What do the two producers have a comparative advantage in?CornPaul has a comparative advantage in both wheat and corn.Paul has a comparative advantage in wheat, and Cliff has a comparative advantage in corn.Cliff has a comparative advantage in wheat, and Paul has a comparative advantage in corn.Cliff has a comparative advantage in both wheat and corn.

Answered: Wheat 0 Paul 10 Corn Wheat 6 0 Paul has…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Wheat
8
Paul
10
Corn
Wheat
6
4
Cliff
Refer to Figure 3-1. What do the two producers have a comparative advantage in?
Corn
Paul has a comparative advantage in both wheat and corn.
Paul has a comparative advantage in wheat, and Cliff has a comparative advantage in corn.
Cliff has a comparative advantage in wheat, and Paul has a comparative advantage in corn.
Cliff has a comparative advantage in both wheat and corn.

Expert Solution

Introduction:

A person has a comparative advantage if he can produce something at a lower cost than everyone else. Having a comparative advantage does not imply being the best at something. A benefit of comparative advantage is the ability to produce a good or service at a lower opportunity cost. Businesses with a comparative advantage can sell goods and services at lower prices than competitors, resulting in higher sales margins and greater profitability.

In economics, the opportunity cost is the value of what you have to give up in order to choose something else. The concept of Opportunity Cost helps us choose the best option from among all available options.

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