Question

James and Lisa are preparing for a party by making cookies and cupcakes. In two hours, James can make 18 cookies or 12 cupcakes. In two hours, Lisa can make 40 cookies or 20 cupcakes. ________ has the absolute advantage in cookie production and _______ has the comparative advantage in cookie production.

Answer 1

Answer:

Lisa has both absolute and comparative advantages in cookie production.

Explanation:

Absolute advantage is the ability of an individual to produce more output than competitors, using the same amount of resources while competitive advantage the ability of an individual to produce a good (or service) at a lower opportunity cost than competitors.

Since both Lisa and James work for the same number of hours and Lisa has better outputs, it means she has both absolute and competitive advantages over James.