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When a country has a comparative advantage in the production of a good, which of the following is true?
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2. Introductory Economic Models
PPF - Comparative Advantage and Absolute Advantage
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Who has the absolute advantage in making scrambled eggs?
A
Joe
B
Carla
C
No one
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Understand the concept of absolute advantage: It refers to the ability of an individual or group to produce a good or service more efficiently than competitors, using the same amount of resources.
Examine the graphs provided for Joe and Carla. Each graph shows a production possibility frontier (PPF) for two goods: Fresh Squeezed Orange Juice and Scrambled Eggs.
Identify the maximum number of scrambled eggs each person can produce. For Joe, the maximum is 4 scrambled eggs, and for Carla, it is also 4 scrambled eggs.
Compare the maximum outputs for scrambled eggs between Joe and Carla. Since both can produce the same maximum number of scrambled eggs, neither has an absolute advantage in making scrambled eggs.
Conclude that since neither Joe nor Carla can produce more scrambled eggs than the other with the same resources, the correct answer is that no one has the absolute advantage in making scrambled eggs.
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