Final answer:
Kate has an absolute advantage in producing hats, and Pippa has an absolute advantage in dress production. Absolute advantage is determined by who can produce more of a good with a fixed amount of labor.
Step-by-step explanation:
In determining who has the absolute advantage for each good between Kate and Pippa, we compare the output of goods each can produce with a fixed amount of labor. Kate can produce 15 hats or 30 dresses, while Pippa can produce 10 hats or 40 dresses. Kate has an absolute advantage in producing hats because she can produce 15 hats compared to Pippa's 10. Conversely, Pippa has an absolute advantage in producing dresses as she can produce 40 dresses compared to Kate's 30. This conclusion is drawn because each can produce more of a good with the same amount of labor compared to the other.
The concept of comparative advantage should also be considered when each individual decides on what good to specialize in. Comparative advantage occurs when a producer has a lower opportunity cost for producing a good compared to another producer. However, the information provided doesn't include the specifics required to calculate the opportunity cost and determine the comparative advantages for Kate and Pippa.