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Question
Use the following scenario to answer the following questions:
Karl and Jager produce cars and trucks. Karl can produce 10 cars per hour or 5 trucks per hour. Jager can produce 12 cars per hour or 4 trucks per hour.
Based on the scenario, which of the following is true?
a. Jager has an absolute advantage in producing cars, but not trucks.
b. Jager has an absolute advantage in producing trucks, but not cars.
c. Jager has an absolute advantage in producing both goods.
d. Jager has an absolute advantage in producing neither good.
e. Karl has a comparative advantage in producing both goods.
Answer
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