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8 June, 05:49

If luke can bake bread at a lower opportunity cost than jason, and jason can produce paintings at a lower opportunity cost than luke, it follows that

a. luke has a comparative advantage in paintings and jason has a comparative advantage in baking bread.

b. both luke and jason have a comparative advantage in baking bread.

c. both luke and jason have a comparative disadvantage in producing paintings.

d. luke has a comparative advantage in baking bread and jason has a comparative advantage in producing paintings.

e. there is not enough information to answer the question.

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Answers (1)
  1. 8 June, 07:03
    0
    The correct answer is option d.

    Explanation:

    Comparative advantage refers to the situation where an individual, firm or nation can produce a good at a relatively lower cost than its competitors.

    Luke can bake bread at a relatively lower opportunity cost while Jason can produce paintings at a relatively lower opportunity cost.

    This implies that Luke has a comparative advantage in baking bread and Jason has a comparative advantage in making paintings.

    Luke specializes in baking bread and Jason specializes in making paintings.
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