Question

Ted can wax a car in 20 minutes or wash a car in 60 minutes. Tom can wax a car in 15 minutes or wash a car in 30 minutes. What is each man's opportunity cost of washing a car? Who has a comparative advantage in washing cars?

Answer 1

Ted = 1/3

Tom = 1/2

Ted

Step-by-step explanation:

Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.

The opportunity cost of washing car for Ted = 20 / 60 = 1 / 3

The opportunity cost of washing car for Tom = 15 / 30 = 1/2

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

Ted has a lower opportunity cost in washing cars when compared to Tom. Therefore, Ted has a comparative advantage in washing cars.

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