Comparative and Absolute Advantage Assignment

Look at the examples, and then determine which type of advantage each one describes.

Absolute- A producer can provide cable service more cheaply than another producer. Comparative- A producer can produce salads while giving up fewer opportunities to make sandwiches than another producer. Absolute- A producer can create more car parts than another producer, while using the same number of resources.

Based on the information in the scenario, describe the absolute and comparative advantage held by each worker in Hector's office. Give your answer in the form of at least three sentences.

Each employee has an absolute and comparative advantage in a category of work. Sasha has an absolute and comparative advantage when doing computer design-she is more efficient, and she is not giving up much of an opportunity cost. Maurice has an absolute and comparative advantage when doing logo design, for the same reasons.

How should Hector use specialization to solve his problem? Based on the scenario, recommend which employee should work on which task.

Hector should have his employees specialize so that they can make use of their advantages. Because Sasha has an absolute and comparative advantage when doing computer work, this should be her task. This means that Maurice should spend his time on logo design. By making these changes, Hector will help his employees work more efficiently.

Sam and KC both work in a tax office. Both workers use the same number of resources to do their jobs. Use the production possibility schedule to complete each sentence.

In this example, KC has an absolute advantage in processing tax returns. Sam has an absolute advantage in completing sales calls.

Which of the following statements is a valid economic conclusion based on this information?

It would be best for Sam to work only on making sales calls.

Use the production possibility schedule to complete each sentence.

Producers have a comparative advantage when they have a lower opportunity cost. KC has a comparative advantage in processing tax returns. Sam has a comparative advantage in making sales calls.