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Based on the data below, identify which good each person has a comparative advantage in producing....

Based on the data below, identify which good each person has a comparative advantage in producing.

  1. Person A can produce the following three combinations of goods: (1) 10X and 0Y, (2) 5X and 5Y, (3) 0X and 10Y.
  2. Person B can produce the following three combinations of goods: (1) 10X and 0Y, (2) 5X and 15Y, (3) 0X and 30Y
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Opportunity cost = Gain of units of one good / Loss of units one good

Person A has comparative advantage in producing good X , because it has lower opportunity cost than B
He has to sacrifice =10/10 = 1 unit of Y for a unit of X , whereas B will have to sacrifice 3 (30 /10 ) units of Y for a good of X .

Person B has comparative advantage in producing good Y , because it has lower opportunity cost than A .
He has to sacrifice 10/30 = 1/3 unit sof X for a unit of Y , whereas A has to sacrifice 10/10 = 1 unit of X for rach unit of Y .

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