Question

Martha can produce 90 quilts or 180 batches of chocolate chip cookies in a month. Jane can produce 6 quilts or 18 batches of chocolate chip cookies in a month. Distinguish between comparative advantage and absolute advantage. ​_______ has an absolute advantage in both goods. A. Martha B. Jane ​______ has a comparative advantage in quilts.​ ______ has a comparative advantage in chocolate chip cookies. A. Jane​; Martha B. Martha​; Jane C. Jane​; Jane D. Martha​; Martha

Answer 1

Answer: The correct answers are a) & b). That is MARTHA, MARTHA; JANE.

Explanation: Absolute advantage exists when a party can oroduce a highe quantity of a good or product. This is the situation with Martha in her productions.

Comparative advantage on the other hand is when a party has a lower opportunity cost. This exists in both the production of quilts and chocolate chip cookies.

Answer 2

The correct answer to the given question is:

• A. Jane; Martha

Absolute Advantage

This refers to the economic situation where a person has the ability to produce goods which are of a higher quantity when compared to another person.

Comparative Advantage

This refers to the economic situation where one person has a lower opportunity cost which shows that he or she has foregone alternatives in comparison to another.

Therefore, the correct answer is option A

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