Question

katrina and david can both produce pizzas and loaves of bread. in one hour, katrina can produce 10 pizzas or 20 loaves of bread. in one hour, david can produce 6 pizzas or 18 loaves of bread. which of the following is a true statement about absolute advantage? g

Answer 1

In the given options, A is the correct answers.

A)Katrina has an absolute advantage in both goods.

B)Katrina has an absolute advantage in pizza but not in bread.

C)Katrina has an absolute advantage in bread but not in pizza.

D)David has an absolute advantage in both goods.

Katrina has an absolute advantage in both goods as she produces more of both goods as compared to David.

as Katrina can produce 10 pizzas or 20 loaves of bread in 1 hour. hence for every pizza she produces she gives up 20/10 = 2 loaves of bread.

for every  loaf of bread she produces, she gives up 10/20 = 1/2 pizza

as David can produce 6 pizzas or 18 loaves of bread in an hour hence for every pizza he produces, David gives up 18/6 = 3 loaves of bread.

For every loaf of bread he produces, he gives up 6/18 = 1/3 pizza.

hence, Katrina has absolute advantage over David

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