Question

Tanya can make 33 loaves of breadloaves of bread or 1 apple pieapple pie in one hour. Jonathan can make 22 loaves of breadloaves of bread or 1 apple pieapple pie in one hour. Based on this​ information, which of the following is a true​ statement?

A. Tanya has a comparative advantage in making apple piesapple pies.
B. Jonathan has an absolute advantage in making breadbread.
C. Tanya has a comparative advantage in making breadbread.
D. Jonathan has a comparative advantage in making breadbread.

Answer 1

C. Tanya has a comparative advantage in making bread loaves.

Step-by-step explanation:

Comparative advantage describes the ability of an individual, firm, or country to produce a particular product at a lower cost than everybody else. A party has a comparative advantage if it can produce the same quantity of goods as others using fewer inputs. A business or a country that has a comparative advantage can sell them at a lower price than its competitors.

Tanya has a comparative advantage in making bread. He produces 33 units per hour as compared to 22 units by Jonathan. Tanya's comparative advantage arises in the use of labor as a factor of production. He uses less labor per unit of bread loaves, which makes his cost of production lower than that of Jonathan. He can sell his bread loaves at a lower price compared to Jonathan.