Question

Alan and Brian work at a baseball and softball manufacturing plant. Alan can produce either 10 baseballs or 4 softballs in an hour. Brain can produce either 8 baseballs or 2 softballs in an hour. Brian has the comparative advantage over Alan in the production of:

a. softballs

b. both softballs and baseballs

c. neither softballs and baseballs

d. baseballs

e. softballs if he makes no more than 2 an hour

Answer 1

Ans. d. baseballs

For Alan

The opportunity cost of Baseball

10 baseballs = 4 softballs

1 baseball = 4/10 softball

1 baseball = 0.4 softball

The opportunity cost of Softball

4 softballs = 10 baseballs

1 softball = 10/4 baseballs

1 softball = 2.5 softballs

For Brian

The opportunity cost of Baseball

8 baseballs = 2 softballs

1 baseball = 2/8 softball

1 baseball = 0.25 softball

The opportunity cost of Softball

2 softballs = 8 baseballs

1 softball = 8/2 baseballs

1 softball = 4 baseball

Hence, Brian has a comparative advantage over Alan in the production of baseballs because Brian has a lower opportunity cost ( i.e. 1 baseball = 0.25 softball ) in the production of baseball than Alan ( i.e. 1 baseball = 0.40 softball ).