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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Once again, in an hour, David can wash 2 cars or mow 1 Lawn, and Ron 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?

  1. a. David in washing, Ron in mowing.
  2. b. Ron in washing, David in mowing.
  3. c. David in washing, neither in mowing.
  4. d. Ron in washing, neither in mowing.

To determine
Comparative advantage.

Explanation

Option (b):

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

Option (a):

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

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