
The difference between absolute and

Explanation of Solution
The concept of
In the given example, Michelle Wie, the professional golfer and you can finish laundry and golf. Suppose, she uses less time to finish laundry and golf than that of you take. Here, Michelle has an absolute advantage in both golf and laundry. Then, Michelle hires you to do laundry because her opportunity of laundry is higher than that of you.
Opportunity cost: Opportunity cost is the cost of a foregone alternative that is the loss of other alternative when one alternative is chosen.
Absolute advantage: It is the ability to produce a good using fewer inputs than another producer.
Comparative advantage: It refers to the ability to produce a good at a lower opportunity cost than another producer.
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Chapter 15 Solutions
Macroeconomics: Principles for a Changing World
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