Question

It takes Juan 1 hour to wash a car and 2 hours to wax it. Maria, on the other hand, takes 1 hour to wash a car and half an hour to wax it. If they divide the work, _______ would specialize in washing since his/her opportunity cost is _________ for that activity.

Answer 1

Answer: Juan; Lower

Step-by-step explanation:

One can do the work in which it has a comparative advantage. If one person has the lower opportunity cost of doing some work than the other person then he would specialize in that activity.

Here,

Juan opportunity cost of washing a car =
`(1)/(2)`

= 0.5 car waxed

This means that the opportunity cost of washing a car is being able to wax 0.5 car.

Maria opportunity cost of washing a car =
`(1)/(0.5)`

= 2 cars waxed

This means that the opportunity cost of washing a car is being able to wax 2 cars.

Therefore, the opportunity cost of washing a car is lower for Juan. So, Juan would specialize in washing.