in one hour, Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. Sue's opportunity cost of producing a cap is cost of producing a cap is jackets has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps, then Select one Oa5.0/100/Tessa/Sueloses but Tessa gains b. 02/0.10/Sue/both Sue and Tessa gain Sue and Tessa gain gains but Sue loses e. 5.0/10.0/Sue/both Sue and Tessa gain 0c02/0.10/Tessa/both Od02/010/Sue/Tessa jackets and Tessa's opportunity

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.