Complete/Correct Question:
Assume that Brad and Theresa can switch between producing wheat and producing beef at a constant rate.
Minutes Needed to Make
1 Bushel of Wheat
Brad: 10
Theresa: 6
1 Pound of Beef
Brad: 12
Theresa: 10
Brad has a comparative advantage in the production of
a. wheat and Theresa has a comparative advantage in the production of beef.
b. beef and Theresa has a comparative advantage in the production of wheat.
c. both goods and Theresa has a comparative advantage in the production of neither good.
d. neither good and Theresa has a comparative advantage in the production of both goods.
Answer:
B, beef and Theresa has a comparative advantage in the production of wheat.
Explanation:
Firstly, let's define comparative advantage.
Comparative advantage can be said to be the ability to produce a product at a far lesser rate than is obtainable.
From the above question, it can be deduced that Theresa has a comparative advantage in the production of wheat going by the huge difference in the time needed to produce wheat.
On the other hand, Brad has a comparative advantage in the production of beef. This is because the time difference in the production time of wheat isn't the same with beef and as such Brad has some advantage in this regard.
Cheers.
