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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Once again, in an hour. Mateo can wash 2 cars or mow 1 lawn, and Tyler can wash 3 cars or mow 1 lawn. Who has the comparative advantage in car washing, and who has the comparative advantage in lawn mowing?

a. Mateo in washing, Tyler in mowing.

b. Tyler in washing, Mateo in mowing.

c. Mateo in washing, neither in mowing.

d. Tyler in washing, neither in mowing.

To determine

Comparative advantage.

Explanation

Option (b):

The opportunity cost for Mateo in washing 1 car is mowing 0.5 lawns (12)   and for Tyler is mowing 0.33 lawns (13) . Since the opportunity cost for Tyler is lower than Mateo, Tyler has the comparative advantage in washing car. Also, the opportunity cost for Mateo in mowing 1 lawn is washing 2 cars (21)   and for Tyler is washing 3 cars (31) . Since the opportunity cost for Mateo is lower for mowing lawn, Mateo has the comparative advantage in mowing lawn. So, option ‘b’ is correct.

Option (a):

The opportunity cost for Mateo in washing 1 car is mowing 0.5 lawns (12)   and for Tyler is 0.33 lawn (13)

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