Question

Cindy and Martin both sew t-shirts in a small factory. Using the same resources, Martin can sew twelve t-shirts and Cindy can sew nine t-shirts in one day. Which of the following can be concluded from the given information?

A. Martin has a higher opportunity cost of sewing t-shirts than Cindy does.
B. Cindy has a comparative advantage in sewing t-shirts.
C. Martin has a comparative advantage in sewing t-shirts.
D. Martin has an absolute advantage in sewing t-shirts.
E. Cindy has an absolute advantage in sewing t-shirts.

Answer 1

D. Martin has an absolute advantage in sewing t-shirts.

Step-by-step explanation:

A person has absolute advantage in the production of a good or service If he produces more quantity of the good when compared with other people.

Martin produces 12 shirts while Cindy produces 9 shirts. Therefore, Martin has an absolute advantage in the production of shirts.

A person has comparative advantage in production if it produces at a lower opportunity cost when compared with other people.

To determine opportunity cost and comparative advantage, the alternative activities Cindy and Martin would have engaged in if they weren't producing shirts has to be provided.

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