Question

Ted can wax a car in 20 minutes or wash a car in 60 minutes. Tom can wax a car in 15 minutes or wash a car in 30 minutes. What is each man’s opportunity cost of washing a car? Ted's opportunity cost of washing one car is wax jobs. Tom's opportunity cost of washing one car is wax jobs. Who has a comparative advantage in washing cars?

Answer 1

Answer:

0.33

0.5

Ted

Explanation:

Ted's opportunity cost = 20 / 60 = 0.33

Tom's opportunity cost = 15 / 30 = 0.5

A person has comparative advantage in an activity if he carries out the activity at a lower opportunity cost when compared with other people.

Thus, ted has an opportunity cost in washing cars.

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