Question

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli.
A) Bo has a comparative advantage in the production of stromboli because her opportunity cost is lower.
B) Bo has a comparative advantage in the production of stromboli because her opportunity cost is higher.
C) Bo has a comparative advantage in the production of pizzas because her opportunity cost is lower.
D) Bo has a comparative advantage in the production of pizzas because her opportunity cost is higher.
E) Bo has a comparative advantage in the production of both pizzas and stromboli.

Answer 1

QUESTION:

The table below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Refer to this table to answer questions 3-4.

                           Bo                                                    Kenzi

          Pizza                 Stromboli                      Pizza                 Stromboli

            25                            50                             40                         20  

Answer: A -  Bo has a comparative advantage in the production of stromboli because her opportunity cost is lower.

Explanation:Production possibilities frontiers (PPFs) indicates the maximum output combinations of two goods or services an economy can achieve by fully using all available resources efficiently.

This means that,  if more of product A is produced, less of product B can be produced given that the resources and production technology remain constant.

Looking at the question above, Bo has a competitive advantage as Bo produces more of both pizza and stromboli than kenzi.